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Savings of this type can be illustrated by these examples: (1) The serviceable life of an electric fan was increased several times over through standardization requirements to insure improved performance and longer life ; (2) The serviceable life of electric refrigerators was increased fivefold through the same type of standardization processes.
Very briefly, many other benefits and opportunities for tremendous savings will be made possible by a uniform Federal catalog system. On design engineering and development work, the interchange of technical data and information on the application and use of materials and equipment will be facilitated thus obviating duplication of effort in these activities. By referencing to catalog items reliable purchase specifications, duplicate effort by each agency in selecting the most effective specification can be eliminated. Information on the serviceability of standard items can be exchanged more expediently between agencies, resulting in the introduction of more serviceable items into the supply system. The most satisfactory basis for determining requirements can also be established through the exchange of agency data on consumption rates for standard items used in common. Estimates on productive resources can be made on a uniform and intelligible basis, thereby facilitating the allocation of resources especially necessary in times of national emergency. Similar benefits and savings will also be made possible in all other supply processes: Purchasing, distribution, inventory control, issue of stock items, storage and handling, surplus disposal, protection of stocks, equipment, maintenance, packaging, transportation, inspection, and the preparation of supply reports and estimates.
Due to the magnitude and complexity of Federal procurement and Federal inventory, savings resulting from uniform identification and commodity standardization made possible through cataloging will run into the millons or even billions of dollars. These savings cannot be estimated in monetary terms, however, because present supply operations are so uncoordinated that the necessary data upon which to prepare such estimates is not available.
The Federal Government today uses many types of different purchase specifications. There are in existence, for example, 1,980 Federal specifications, 5,785 Army specifications, 1,402 Navy specifications, 704 Joint Army-Navy specifications, and numerous other departmental specifications prepared by individual purchasing officers in the various agencies. Because of these varying requirements for the materials specified, many of which are used in common, the cost of supply is greatly multiplied. By coordinating and unifying requirements for items in common use, the purchase operation is not only greatly simplified but also both large and small manufacturers may compete on an equal basis for Government business without discrimination. Federal specifications are developed by interdepartmental technical committees under the Federal Specifications Board. They are promulgated by the Bureau of Federal Supply and are designed to coordinate the common requirements of all agencies.
A few examples will serve to illustrate the type and extent of savings which can be made through specifications and related work: (1) Wilton rugs purchased under Federal Specification DD-C-718 showed an increase of 18 percent per unit of wear compared to wilton rugs purchased without the use of the Federal specification. Estimated savings on this item alone are $51,000 annually, (2) The latest revision of the Bureau of Federal Supply specification for tire chains provides for only the reinforced type of chain. Based on the amount of Federal purchases of standard chains, use of the reinforced chain can save $135,000 a year. (3) Information circulated to Government agencies explaining how satisfactory performance may be obtained in motor vehicles by using “regular” grade instead of “premium” gasoline should result in a saving of hundreds of thousands of dollars annually. These examples are taken from data available in the Bureau of Federal Supply. Similar examples undoubtedly occur in other agencies, such as the military, which handle their own procurement.
III. INSPECTION OF COMMODITIES The major purpose of inspection and testing of commodities is to determine that the material furnished actually complies with the specifications of the contract. Effective inspection more than pays for itself for the cost of putting unsatisfactory material in use or of not having the right material where and when it is needed is many times greater than the cost of inspection or than the intrinsic worth of the material itself. Although the average supplier intends to furnish the specified material, inspection insures that this is actually done and thereby protects the interests of unsuccessful bidders.
In many instances inspection results in the rejection of material that would have injured the health and safety of the user or caused loss of life. For example, recent tests on fire extinguishers showed that the foam failed to extinguish fire because it was unstable and too dry to flow properly over the flame. Replacements also failed to extinguish fire and were rejected thus preventing the acceptance of material which if undetected and accepted could have created a potential loss of life and property of unestimated value. In addition, the careful inspection and analysis of commodities intended for human consumption results in the rejection and at times the seizure by the United States marshal of contaminated food items thus preventing possible illness or even loss of life.
Grading of material, often performed during inspection, establishes the price differential appropriate for the quality of the material being procured. In other cases, inspection and testing of material shows that they are of substandard quality and must either be rejected or, in the case of surplus materials, seg. l'egated to prevent contamination of material already in stock pile. Periodic inspection of materials in storage shows whether they are being stock piled according to the proper storage methods and enables rotation of materials subject to deterioration. If this rotation is not performed as required, enormous losses would result to the Government. Examples of savings made through inspection are: (1) A recent inspection of 1,200 long tons of crude rubber resulted in price allowances (based on commercial trade practice) of 21/2 cents per pound under the contract price. Net savings to the Government amounted to $80,000. (2) Approximately 7,000 bags of zircon ore, worth $16,750 were rejected because assay of the sample taken during inspection showed a higher percentage of titanium dioxide than that allowed by the contract specifications. The sample contained particles of rutile ore, indicating that at least several bags of rutile had become mixed with the zircon offered for delivery. Proper sorting by the contractor disclosed that there were actually 100 bags of rutile in the rejected lot. If this lot had been accepted without inspection, and the 100 bags of rutile placed in tank storage, the titanium dioxide contained in the rutile would have contaminated 3,000 tons of zircon already in the stock-pile tank, valued at approximately $144,000. Including the value of the rejected delivery, this meant a total saving of $160,750.
IV. RESEARCH AND TECHNICAL SERVICES
An effective standards organization requires the support of adequate research and technical services. Although savings from this type of work are difficult to evaluate in dollars and cents, it benefits such operations as cataloging, specification development, and inspection by providing basic technical commodity information and quality data. In addition to a competent research staff, a complete standards organization requires a technical library containing a wide range of commodity and standards data and publications, and a technical editorial staff to assure the issuance of specifications and other documents which are technically accurate and clear. The Research and Technical Services Division of the Bureau of Federal Supply performs these functions to the degree possible with present funds.
SECRETARY OF DEFENSE,
Washington, D. C., May 12, 1948. Memorandum for: The Secretary of the Army.
The Secretary of the Navy.
The Secretary of the Air Force. Subject: Munitions Board cataloging project.
1. I consider it necessary at this time to bring to your attention the great importance I attach to the armed services cataloging program which has been placed under way by the Munitions Board. It must be understood clearly that I consider the project to be of primary importance to the effective conduct of business in the Military Establishment; that I believe it will lead most positively to a simple and well-understood approach of the three services to industry, and that I believe its proved results in segmental fields which have been explored demonstrate conclusively such great savings to the taxpayer in the processes of procurement that we in the Military Establishment must not fail to prosecute the project with the utmost vigor, and to secure at the earliest possible date the fullest and most complete utilization of its possibilities.
2. Lest there be any misunderstanding of purpose and any ensuing deflection of effort, the following definition covers what I conceive this cataloging program and its objectives to be.
The ultimate objective will be to name, describe, classify, and number each unique item used, purchased, stocked, or distributed by the Military Establishment, by such methods and in such manner that only one distinctive selection of letters and numerals will identify the same item within a bureau or service, or between bureaus or services, or between the Departments. The single item characterization will then be used for all functions of supply from original purchase to final field or area distribution. When the project has advanced sufficiently, each supply system of the services will select for its own use such categories of items from the central pool as it needs to meet its own purposes, and publish these in such form as will best further its purposes, but individual identical items will bear the same characterization in every catalog segment thus prepared and used.
3. It is estimated that the project will comprise the processing of some 5,000,000 items of military usage. In segments and areas of interest, many of these items have already been described and classified, and the project program must integrate the work already done by bureaus or services with the least friction, and assign the uncovered areas for field work to the most cognizant agencies.
4. It is obvious that the project is expensive; that it will be a burden on the personnel and appropriations of every bureau and service, and will require the most earnest and cooperative effort on the part of every agency to bring it to such substantial completion that it will be continually useful to all. There is being developed under the Munitions Board a coordinating central agency to pick up work already done, to assign new areas for field work, and to eliminate duplication where the same item has been described in two or more category assignments. Purely as an estimate, 3 years has been set as the time necessary to bring the cataloging program to full utilization. If that goal can be met, we must reach it. We cannot afford to enter a future national emergency without having the military cataloging system so well completed, so well understood, and so well accepted, but that we will reap the full benefits which can be expected from it.
STATEMENT OF THE DEPARTMENT OF STATE
The Secretary of State has been delegated authority by the War Assets Administrator (sec. 8301.5, regulation 1, WAA, August 27, 1948) to dispose of surplus military property located within the continental United States, its Territories and possessions, to foreign governments. This disposal function has been redelegated in its entirety by the Secretary of State to the Foreign Liquidation Commissioner. The quantities and types of surplus military property disposed of to foreign governments is approved jointly by the Department of State and the National Military Establishment on the basis that such transfers are in the national interest of the United States Government.
Under the provisions of Public Law 862, Eightieth Congress, as amended by Public Law 7, Eighty-first Congress, the Office of the Foreign Liquidation Commissioner, Department of State, is authorized to make such transfers up to and including June 30, 1949, from property declared surplus to it prior to July 1, 1948. All negotiations currently in process will have been concluded by June 30, 1949, either by reduction to contracts or by cancellation. However, deliveries under many of these contracts will not have been completed by that date. The fiscal and accounting work in regard to these and other contracts will likewise not have been completed by June 30, 1949. The personnel of the Budget and Accounting Division of the Office of the Foreign Liquidation Commissioner are presently handling this fiscal and accounting work together with that of foreign surplus disposal.
If bill H. R. 2781 is enacted into law, section 201 (d) of that bill specifically provides for the continued performance by the Department of State of residual functions “with respect to agreements for the disposal of foreign excess property in effect on the effective date of this act” but no provision is made for continued performance by the Department of State of residual functions with respect to agreements for surplus military property entered into by the Office of the Foreign Liquidation Commissioner. It is the opinion of the Department of State that because of the merger of fiscal and accounting functions as noted hereinabove, and for reasons of foreign policy, the administration of residual functions under contracts for disposal of surplus military property to foreign governments should be continued in the Department of State.
Accordingly, although the delegation of authority from the War Assets Administrator referred to hereinabove will terminate upon the abolition of the War Assets Administration (sec. '101 (c)) if bill H. R. 2781 is enacted into law, the Department of State wishes to go on record that, in lieu of specific provision in the act, it will request a delegation of authority from the Federal Works Administrator (pursuant to his authority in sec. 106 of the act) to continue to perform other functions with respect to agreements for the disposal to foreign governments of surplus military property located within the United States, its Territories and possessions, in effect on the effective date of the act.
REASONS FOR PROCURING AND STOCKING BEFORE CATALOGING
Any cataloging system to be adequate must be able to meet satisfactorily the demands placed upon it in both times of peace and war. During peacetime, economy is of essence. In war, prime consideration must be delivery of the item needed in the quantities required, where required, and when required. Otherwise, catastrophe is inevitable.
Cataloging data, necessary to effectively identify an item entering a supply system of the Government for the first time, must be furnished by the manufacturer of the item. A manufacturer, in order to furnish an item description which is accurate and firm, must know with certainty that all design and shop changes have been made in the item to be delivered. He cannot know this until after procurement has been placed by the Government and the first production items are ready for delivery.
To delay procurement and stocking of an item until after that item is completely cataloged, therefore, would result in (1) extra expense to the manufacturer and the Government in making unavoidable and unnecessary corrections in the item descriptions established, (2) introduce into the cataloging system descriptions and identification numbers which are obsolete before application, (3) produce confusion by introducing and canceling use of identifying data that are not accurate, (4) delay ultimate delivery of the needed item to the consumer in the quantities required, where required, and when required because delivery cannot be realized until after procurement is placed and production completed. In war, the answer might well be—too little, too late.
REASONS FOR THE EXISTENCE OF OPERATING CATALOGS IN THE SERVICES, BUREAU'S, AND
COMMANDS OF THE NATIONAL MILITARY ESTABLISHMENT
The charge has been made that each of the services, bureaus, and commands of the three military departments has its own separate operating catalog. It can be assumed that the intent implied in this charge is that one single Catalog for the three departments is more desirable from the standpoint of efficiency and economy.
An examination of the reasons for the existence of operating catalogs in each of the services, bureaus, and commands will prove the fallacy of this contention.
Each of the services, bureaus, and commands in the three departments was established to fulfill a specific mission within the department. Under the authority granted it in accomplishing its mission, the agency procures such material and equipment as is considered necessary in the performance of its assigned function. Furthermore, the individual agency alone is responsible for the maintenance and upkeep of its material and equipment. To discharge this obligation, each agency has established its stocking, distribution, and maintenance policies which, because of the differences in the mission of the agency and in the material required in its performance, will be at variance with those of other agencies. For this reason, a single catalog, containing several million items to which diverse stocking, distribution, and maintenance policies apply, and furthermore of such voluminous proportions as to discourage use of the document, could hardly be useful from the standpoint of economy and efficiency to a unit of the Military Establishment whose operations require only a small portion of the material contained therein. Of what use to a military hospital, for instance, would be a catalog containing, among other things, all of the aeronautical, construction, marine, and ordnance material in the Military Establishment?
FEDERAL PROPERTY ACT OF 1949
On the other hand, of vital importance to the National Military Establishment in the futablishment, such as is planned under the Munitions Board cataloging fotonin, of a pool of uniform identification data for all material used by the Mailiniy Establishment and the civil establishments, from which each agency inny let thone portions which apply to the material it uses in fulfilling its initilary inimkion, for incorporation in its operating catalog.
100 ne areas, such as subsistence and clothing items, the practicability of (arttitolo catuloks for use by each of the departments has been recognized and mudian try the Munitions Board cataloging agency are in process to this end.
('l hercupon, the subcommittee adjourned subject to the call of the Chair.)