* *

with the Commission report on Office of General Services, which states on page 3, concerning the responsibility of the Office of General Services, that "* the Office of General Services should, to the greatest extent possible, delegate responsibility for exercising these three functions to the departments and agencies." Again, on page 6, concerning the supply aspects of the recommendations, it is stated that, "It would assure systematic handling and fundamental standards, and its objective would be to decentralize activities into the different departments, agencies, and field office regions."

2. That the proposed organization be established with leadership as the primary objective and possibly located in the Executive Office of the President where those in charge could be presumed to speak more directly for the Chief Executive. It is our thought that this could possibly be more effective in administering any policies and methods which may be prescribed than for the organization to be established in a coordinate agency which would not appear to be required to share quite so completely in the responsibilities for not only servicing but overall accomplishment of the operating programs.

Perhaps the objectives mentioned in paragraphs 1 and 2 above could be illustrated by the following hypothetical case as requested this morning. Suppose photo developer is considered a common-use item and by central arrangements the Government's entire needs can be procured from one source by all Federal agencies at 45 cents per gallon, which may be 10 or 15 cents per gallon cheaper than purchasing from regular open-market sources. The central authority may decide, in view of the estimated quantities of photo developer used by the Government, that the savings which could thus be effected would justify requiring all Federal agencies to use this source exclusively. However, one of the Department's small field stations may need to purchase a gallon of the developer and also at the same time a supply of several other chemicals which may not be available from the particular source designated for the developer by the central authority. The station would, under the circumstances outlined above, have to write two purchase orders; whereas, except for the mandatory source determination of the central agency, the entire lot could be ordered from a single open-market source which could also supply the photo developer, but at the 10 or 15 cents per gallon higher price. If such a case were a fact, the question would then arise as to whether the Government and the over-all economy would be better off in the long run if the program-operating agency which makes out the order could simply include the gallon of photo developer on the one combined order at the slightly higher price or whether another order including a single item for a separate shipment is justified. In view of the administrative costs (the Hoover Commission report mentioned that the administrative cost of processing each purchase transaction is greatly in excess of $10), the necessity of issuing two orders rather than one could thus result in the gallon of photo developer costing the taxpayers more than $10.45 instead of about 55 or 60 cents, since from a practical standpoint it could have been included on one general order at no appreciable increase in administrative cost.

This hypothetical case is intended only to demonstrate the possibilities of what could happen, not only in the instance of one item but literally thousands, unless all of the different problems of the operating agencies are considered and properly weighed in relation to the visible economies to the Government of a central system. We do not doubt the soundness of having a central system nor the possibilities for economies which exist, and as Mr. Scammahorn mentioned this morning, it is the policy of the Department to use the different central sources to the fullest extent practicable. We merely use this as a demonstration of the intimate relationship of the administrative problems of the operating agencies to any central supply program.

The question raised is merely whether any agency which is coordinate with other departmental agencies can be expected to maintain the same perspective and degree of balanced thinking under the stress of having to make decisions intimately affecting the servicing of operating programs and over-all economy as would be the case if the decisions were made by an authority placed in a position in which the responsibility for the administrative costs and servicing the operating programs authorized by the Congress will be equal to that for carrying on the central supply system. The enlargement and overemphasis of a central supply system is a natural tendency in the earnest desire of giving maximum service, and we thought the committee might want to consider whether a staff office of the President would give greater assurance to everyone concerned that these responsibilities will be equal.

The question was also raised this morning concerning the relationship of this suggestion to the Hoover Commission studies and report. Lacking clarification to the contrary, it seems that the above could be considered as in agreement with the Hoover Commission report on Office of General Services, which states on page 1 that, "Since these activities relate to all departments, there is only one place in the executive branch of the Government where authority should be vested. That is in the President, subject, of course to appropriate legislative directions."

3. Subsection (a) (iv) of section 102 of the bill confers authority on the Administrator to advise all agencies on traffic activities and to represent all agencies in negotiating rates and charges with carriers and in proceedings involving carriers' rates and charges before Federal and State regulatory bodies. The Department is a large shipper of farm and food products, yet it also has responsibilities as the advocate of the farmer in freight rate cases and other transportation matters brought before the Interstate Commerce Commission or other regulatory agencies, and as a purchaser of operating supplies and equipment. It is with all of these responsibilities in mind that we have approached our consideration of this subsection.

Section 201 of the Agricultural Adjustment Act of 1938 authorizes the Department to appear in cases before the Interstate Commerce Commission in which rates on agricultural products are involved. Further, section 203 of the Research and Marketing Act of 1946 broadened the scope of that work to include appearances before other regulatory agencies, State and Federal, directing the Secretary to determine the transportation needs of agricultural products and farm supplies and to assist in obtaining adequate and improved transportation services and facilities for such commodities. Under those statutes the Department maintains close contact with the Interstate Commerce Commission and other agencies to advise them of agricultural transportation requirements so that there may be available in all sections of the country an adequate supply of transport equipment for the movement of all farm and food products, regardless of ownership. Since the appearance on behalf of farmers and farm cooperatives in freight rate cases was authorized, the resultant savings in freight charges on farm products and supplies, including those shipped by the Department, have exceeded $1,000,000,000.

This Department also handles large quantities of commodities in connection with purchases for foreign-relief feeding, price-support programs, and removal of surplus crops. The shipping phases of these programs require very close and short liaison between procurement, transportation, and disposition organizations of the Department and the establishment of a Traffic Bureau separate and apart from the Department would greatly hinder this close liaison. We are obliged to observe exact timing and strict shipping schedules, and the delays incident to dealing with another agency for our traffic requirements would adversely affect the transportation phases of these programs. The Department of Agriculture is a procurement agency in effectuating the purpose of various laws and programs. Likewise, the Department is a distributing agency for the disposal of commodities acquired. This, too, is for the purpose of effectuating various laws and programs. It is our opinion that the Department would be hindered and severely handicapped in the performance of its procurement and distribution responsibilities if the policies of a separate transportation agency were superimposed on these responsibilities. We cannot conceive how, under this act, the delivery of perishables, the execution of emergency purchase programs, or the meeting of changing export vessel schedules could be effected without large losses of commodities, time, and already scarce ocean shipping space. Experience has taught that operations of these types must often be undertaken within a matter of a few hours. Delay of even 24 hours in such instances might result in failure of the operation or cause severe losses.

It is therefore recommended that section 102 (a) be amended by substituting a comma for the period following "security" in line 4, page 10, and adding a proviso, as follows: And, provided further, That nothing contained in clause (iv) above shall operate to impair the authority of the Secretary of Agriculture under section 201 of the Agricultural Adjustment Act of 1938, 52 Stat. 36, or section 203 (j) of the Research and Marketing Act, 60 Stat. 1032."

4. Section 104 (g) and (h) (p. 14) and section 302 (d) (2) (p. 31) deal with matters affecting this Department. With respect to section 104 (g), we would like to emphasize that it is highly important for the Federal Works Administrator to consult with the Secretary of Agriculture in the disposal of surplus agricultural commodities, surplus foods processed from agricultural commodities,

and surplus cotton and woolen goods in order that these commodities will not be put on the market in a manner which would disrupt market prices for agricultural commodities. We are carrying on price support programs with respect to most of the major agricultural commodities, and in some instances a small amount of commodities thrown on the market at the wrong time may have a very disruptive effect on the market price. Such disruptive effect on the market price might require the Department of Agriculture to take over more commodities under its price-support program than would be sold by the Federal Works Administrator.

It is difficult, if not impossible, to say at this time what agricultural commodities or products would be transferred pursuant to section 104 (h). The amount of agricultural commodities and food processed therefrom now in the hands of Government agencies and which may become surplus are much less than at the close of hostilities. The items recently being disposed of do not give us concern. The possibility of our requesting the transfer of any commodity would depend on (a) quantity of the commodity and possibly the time of year in which offerings are made for sale by the Federal Works Administrator, or (b) the existence of a price support or stabilization program which would be directly affected by such sale. There have in the past been quantities of surplus food sold which if they were offered for sale at the wrong time, would adversely affect price support operations of the Commodity Credit Corporation with respect thereto. An example of this would be butter. The Department of Agriculture sold, during the first 2 years following the war, over $25,000,000 worth of butter which was declared surplus by other agencies. We have a butter program in existence now and are starting to buy butter under price support. Twenty-five million dollars' worth of buter thrown on the market today would have a decided effect on the quantity which we would be required to buy under price support.

It is suggested that subsection (h) end with word "Corporation" in line 25, page 14, and that the balance of the subsection be deleted. The language of the suggested deletion is taken from section 21 (c) of the Surplus Property Act of 1944 and authorizes the Commodity Credit Corporation to sell its stock for export at competitive world prices. Subsequent to the enactment of that provision, other legislation applicable to sales for export to the Commodity Credit Corporation has been enacted. The Commodity Credit Corporation Charter Act, Public Law 806, Eightieth Congress, sets forth the powers and duties of the Corporation and the Agricultural Act of 1948, Public Law 897, Eightieth Congress, sets forth, among other things, the requirements with respect to the disposition of agricultural commodities; and further, the Foreign Assistance Act of 1948, Public Law 472, Eightieth Congress, sets forth certain other requirements with respect to sale of surplus agricultural commodities for use in the foreignassistance program. It does not seem fitting to impose export sales conditions in this bill which may be at variance with or more limiting than would be the case of normal business for the Corporation. Furthermore, since section 104 (g) deals only with commodities that are subject to price support or stabilization programs, the proviso beginning in line 7, page 15, prohibiting the export of foods in short supply seems contrary to the basic attempt of the subsection. With regard to section 302 (d) (2) (p. 31 of the bill), I understand that General Fleming of the Federal Works Agency has already indicated to you that the Department of Agriculture in its price-support programs would be allowed to operate as it has heretofore if this bill was enacted into law. The Commodity Credit Corporation also performs procurement and supply operations for food and agricultural commodities needed by the Army for occupied areas, by the Economic Cooperation Administration and certain other Government agencies and foreign governments. Much of our commodities acquired under price support are exported under these programs I have just mentioned. We interpret section 302 (d) (2) to mean that any phase in connection with the programs enumerated in it will be exempted from the requirements of this bill, including such phases as storage and warehousing, traffic, transportation, etc. Of course, we would check with the Federal Works Agency on any warehouses that were available, but we feel that Commodity Credit Corporation must have final say as to whether the warehouse is suitable for our use and is properly located, for we are responsible for the condition of our commodities and for the sale of them to the best advantage of Commodity Credit Corporation, the Government, and the agricultural program of the United States. We have been handling over 500,000,000 bushels of grain in the form of flour and whole grain in the past year, millions of pounds of such commodities as potatoes, dried eggs, dried milk, dried fruit, and many other commodities, some of which, such as potatoes, are highly perishable. We must be

able to handle all phases of the operation from procurement or acquisition to disposition with dispatch or we cannot be held fully accountable for the final results. In order to clarify section 302 (d) (2) on this point it is recommended that it be revised to read as follows:

"Any executive agency with respect to any phase (including, but not limited to, procurement, storage, transportation, processing, and disposal) of any program conducted for purposes of resale, price support, grants to farmers, stabilization, transfer to foreign governments, or foreign aid, relief, or rehabilitation ;”.

Since there was not time to obtain formal clearance through the Bureau of the Budget of the testimony presented by Mr. Scammahorn and Mr. Crow this morning, the matter was discussed informally with that Bureau. We were advised that, while there was no objection to the presentation of our views, such advice involved no commitment as to the relationship of the recommendations to the program of the President.

Sincerely,

CHARLES F. BRANNAN, Secretary.

STATEMENT OF BELTON 0. BRYAN-Continued

Mr. HOLIFIELD. Mr. Bryan, of the State Department, will you take the chair again?

Mr. BRYAN. Yes, Mr. Chairman. I would like to refer to this statement, which contains some minor drafting changes in section 201, which I think is probably desirable, and have it made a part of the record.

Mr. HOLIFIELD. That is a matter of clarification of the language?
Mr. BRYAN. Yes, sir.

Mr. HOLIFIELD. And does not change the substance in any way?
Mr. BRYAN. No, sir.

Mr. HOLIFIELD. It will be received as a part of the record.

(The statement referred to follows:)

STATEMENT OF THE DEPARTMENT OF STATE

Title II of the proposed legislation governing the question of foreign excess property has been carefully reviewed in the Department of State.

The provisions of the several sections under this title appear adequate to safeguard the interests of the Department of State with respect to the programs authorized by existing legislation.

It will be noted that each executive agency owning foreign excess property shall be responsible for the disposal thereof, except where commitments exist under previous agreements, in accordance with the foreign policy of the United States. While the Department is unable to express a general view as to whether the several executive agencies of the Federal Government are in agreement on their respective responsibilities under the proposed bill, it is believed, insofar as the State Department is concerned, that the remaining provisions thereof are essential to an orderly continuance of its responsibilities now governed by law.

The proposed legislation permits the Department to perform its residual responsibilities in liquidating its activities under the Surplus Property Act of 1944, as amended. Furthermore, the proposed bill provides authority for effectuating the cultural and educational exchange program authorized by the Fulbright Act of August 1, 1946 (Public Law 584, 79th Cong.). Moreover, adequate provision is contained therein to carry out the Foreign Service buildings program which Congress implemented, on July 25, 1946 (Public Law 547, 79th Cong.), by authorizing the utilization of credits acquired through lend-lease settlements and surplus property dispositions abroad. The provisions contained in title II of the proposed bill parallel in many respects the authority contained in the Surplus Property Act of 1944 and permit the individual executive agencies to dispose of such property accordingly.

It is believed, however, that the language contained in section 201 at line 18 beginning with the word "for" and running through the word "amended" in line 20 should be deleted. The language recommended for deletion is redundant since line 11 of section 201 already provides for effectuation of the purposes of section 32 (b) (2) of the Surplus Property Act and such language might limit

the use of foreign currencies and credits to the cultural and educational program under the Fulbright Act. The language of lines 13 through 16 of section 201 apparently intends to permit the use of foreign currencies and credits for the Foreign Service buildings program as well as for other governmental expenses payable in local currencies.

STATEMENT OF RAY WARD, ADMINISTRATIVE ANALYST,

BUREAU OF THE BUDGET

Mr. HOLIFIELD. Is Mr. Ray Ward of the Bureau of the Budget present?

Mr. WARD. Yes.

Mr. HOLIFIELD. Mr. Ward, the committee requested you to enter into negotiations with representatives of the General Accounting Office and the leading establishments for the purpose of clarifying certain differences in the accounting procedure. Can you report to the committee what progress has been made?

Mr. WARD. Yes. We have received some additional language from the General Accounting Office and are currently sending that out to the principal agencies involved to get their informal reactions. This action is with the full understanding of the General Accounting Office and the Director of the Budget. We expect to have those comments in today or maybe tomorrow, Mr. Chairman, and I think that this matter will take care of the question of property accounting. We have also been in touch with Mr. Niederlehner, of the Munitions Board, who is preparing a statement, which he promised to send We will see if there are any points in difference. To date we have heard of no such points.

to us.

I might say with respect to the Department of Agriculture that we have been working with Mr. Scammahorn and Mr. Crow, and other people, and the minor points have been taken care of with the exception of one or two which we expect will be done today.

We are also working with the Federal Works people.

Mr. HOLIFIELD. Any questions of Mr. Ward? If not, we thank you, Mr. Ward.

Mr. WARD. Thank you.

STATEMENT OF FRANK H. WEITZEL, ASSISTANT TO THE
COMPTROLLER GENERAL

Mr. HOLIFIELD. Mr. Weitzel, is there any further statement you would like to make to the committee?

Mr. WEITZEL. Merely to collaborate with Mr. Ward's statement. We are working hard to come to an understanding on this. There are no misunderstandings, so far as the Comptroller General and the Director of the Bureau of the Budget are concerned; I think that is a correct statement, is it not?

Mr. WARD. That is correct, yes.

Mr. WEITZEL. And between the Federal Works Agency. But at the present time the Bureau of the Budget is going through an informal clearing process, which it felt would be desirable, because the bill previously had been cleared with the agencies, the executive branch, and we do not want any misunderstandings about any part of the bill, of course. That is why we are taking it up with agencies with whom the bill previously had been cleared.