STATEMENTS OF PHILIP B. FLEMING, ADMINISTRATOR, FEDERAL WORKS AGENCY; AND MAXWELL H. ELLIOTT, GENERAL COUNSEL, FEDERAL WORKS AGENCY

Mr. FLEMING. Mr. Chairman, I will be very glad to, and I appreciate the opportunity of appearing before you.

I have with me the acting general counsel of the Federal Works Agency, Mr. Elliott, who has played a large part in the drafting of this bill as he did in the drafting of the one last year.

My statement will be very brief but I would like to have him explain the bill in more detail.

This is a bill to reorganize and simplify the procurement, utilization, and disposal of Government property. It is generally the same as that which was recommended by the President in his message to the Congress on the 5th of March 1948.

There have been some changes in it, none of any great importance. The bill has been reviewed by the Bureau of the Budget and is in accordance with the program of the President. It has his blessing. I think the bill also, as presently before you, has a few minor changes that the Bureau of the Budget has not had opportunity to pass on. I think they are so small they do not make any great difference. There are also some changes in it which the General Accounting Office will later propose to the subcommittee.

We have seen those proposed by the General Accounting Office and, speaking for the Federal Works Agency, are in full accord with them. I have not had the opportunity to learn the views of the Budget Bureau and of the other executive agencies. This bill is not really any centralized property management as some seem to believe. For instance, the National Military Establishment has its own particular problems, and under the bill they can be given the authority to carry those out without any interference on the part of the Administrator of Federal Works.

And the Department of Agriculture, in its price-support program, will also be able to operate just as they always have.

In many cases there is not even any central purchasing agency. Some agencies who procure largely of one particular commodity, such as the Navy in oil, will continue to procure for all departments of the Government. They are the predominant user in oil and know more about it than anybody else, and they would continue to purchase that.

The same way, perhaps, in lumber, where the Army is generally the biggest user. And for many years, the Army has had a central purchasing agency of lumber. That could also be continued.

I think under the bill some money can be saved by not buying at all, because the Administrator will have to know the ineventories of goods that are in possession of the various agencies and know whether they are excess or not to the particular needs of that agency, and having that knowledge can be able to transfer from one to the other without going out into the marketing fields.

I testified quite thoroughly on this bill before the Senate committee last year on the 31st of March, and a copy of that testimony is in the hearings. I do not think it is necessary for me to repeat all of that

here. It has been published and generally our testimony before that committee and before this committee last year-is all on record.

That covers it generally. I think perhaps it would be better for Mr. Elliott to go into the details of the bill, and I will stay here, and any questions that you want to ask of him or of me, we will be very glad

to answer.

Mr. HOLIFIELD. Thank you, General.

Mr. Elliott, do you wish to make a formal presentation? Do you have a formal statement, or do you wish to make a general statement? Mr. ELLIOTT. I would rather make a general statement, sir. I do not know how far you wish me to go.

You will recall in the closing days of the last Congress, a subcommittee of this committee, of which you were a member, held several hearings, and at the last had representatives of several of the agencies here in which we went through a rather detailed section-by-section analysis of the bill.

Mr. HOLIFIELD. We will have to go over, I might say, some of that, if not most of that testimony this year, because we have almost a completely new subcommittee and almost a completely new whole committee.

Mr. ELLIOTT. I see.

Mr. HOLIFIELD. So it will be necessary for us to go over that testimony again in order that the present members may have the information they need to handle the bill properly.

Mr. ELLIOTT. We have prepared a section-by-section analysis of the present bill as introduced. If it is agreeable to you, sir, we have a number of copies, and I would like to submit that for the record. Then, if it is also agreeable, because the analysis is necessarily rather lengthy, and I do not wish to take too much time of the committee, I would like to skim through it and at any point you wish to ask questions, I can amplify the explanation.

Mr. HOLIFIELD. The formal statement will be inserted in the record at this point and you may make a general summary of it. (The statement is as follows:)

FEDERAL PROPERTY ACT

(H. R. 2781)

SECTION-BY-SECTION ANALYSIS

PREAMBLE

The bill commences with a short title styled the "Federal Property Act of 1949," following which is a table of contents.

Section 2. Declaration of policy

This is very brief and states the intent of the Congress to provide for the Government an economic and efficient system for (a) the procurement and supply of personal property and nonpersonal services; (b) the utilization of available property; and (c) the disposal of surplus property.

Section 3. Definitions

Several definitions require special note. "Property" includes all interests in property except the public domain and the major classes of naval vessels. "Excess property" means any property under the control of any Federal agency not re quired for its needs and responsibilities as determined by the head thereof "Surplus property" means any property which has been declared excess by a particular Federal agency and which, after a survey of the needs of other Federal

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agencies, is determined by the Federal Works Administrator no longer to be required by the Federal Government as a whole.

TITLE I. PROPERTY MANAGEMENT

This deals with the subject of property management within the United States. Section 101. Transfer of the Bureau of Federal Supply and contract settlement functions to the Federal Works Agency and transfer for liquidation of the affairs of the War Assets Administration

(a) Transfer of the Bureau of Federal Supply.-This subsection provides for transferring to the Federal Works Agency the functions, records, and personnel of the Bureau of Federal Supply, now in the Department of the Treasury, and for vesting in the Federal Works Administrator the functions of Treasury personnel relating to the Bureau of Federal Supply. The Bureau of Federal Supply has been in the Department of the Treasury since 1933 and exercises central procurement functions for the executive branch of the Government. Its functions are not essentially related to the primary fiscal and tax functions of the Department of the Treasury so that the Bureau may readily be severed from that Department without impairment of the Department's efficiency. The Bureau in the Federal Works Agency will supplement the service functions of that Agency and will facilitate more economical property management in the Government. Functions of the Secretary of the Treasury, referred to in subparagraph (iii), include all functions vested in him by law, but performed by the Bureau for him under appro priate delegation: for example, stock piling under the Strategic and Critical Materials Stock Piling Act (60 Stat. 596) and functions of over-all supervision and review of the performance of Bureau functions, incidental to his position as head of the Department.

(b) Transfer of contract settlement functions.-This subsection provides for transfer to the Federal Works Administrator of the functions, transferred to the Secretary of the Treasury, a little over 2 years ago, of the Director of Contract Settlement and the Office of Contract Settlement created by the Contract Settlement Act of 1944 (58 Stat. 649; 41 U. S. C. 101-125). These functions relate to the establishment of uniform policies and procedures for the settlement of terminated war contracts by Government contracting agencies and, because of the almost complete liquidation of the contract termination program, are now routine and insignificant. Such little work as has been recently required in connection with this program has been carried on in the Treasury primarily by the Bureau of Federal Supply. It would be in the interest of good management to have this Bureau continue to wind up that program. This subsection likewise transfers from the Treasury to the Federal Works Agency the Appeal Board and the Contract Settlement Advisory Board also created by the Contract Settlement Act of 1944. This transfer is for housekeeping purposes only. The Treasury does not, nor will the Federal Works Administrator, review decisions of the Appeal Board which will perform its functions under conditions and limitations prescribed by law.

(c) Transfer of the affairs of the War Assets Administration. This subsection transfers the War Assets Administration to the Federal Works Agency. The War Assets Administration and the Office of War Assets Administrator are abolished. The provisions in the 1948 bills (H. R. 6276 and S. 2754) that the War Assets Administration shall be administered as a Bureau of Surplus Property in the Federal Works Agency, with authority to the Administrator (in subsec. (e)) to abolish the Bureau as a principal component when he deems it appropriate, have been eliminated. The language with respect to transferred personnel has been simplified along the lines of the provision in the Supplemental Independent Offices Appropriation Act (Public Law 862, 80th Cong.), but the net result will not be substantially different. The personnel of the War Assets Administration will be considered as a separate entity with respect to employment rights and will neither guin nor lose rights by virtue of their transfer to the Federal Works Agency. However, as functions are absorbed from time to time into the other constituent units of the Agency, employees of the War Assets Administration who are retained to perform those functions will acquire rights as employees of the Agency. Persons now holding exempted appointments under the Surplus Property Act may continue to such positions.

(d) Transfer of funds.-This subsection transfers to the Federal Works Agency for activities under the bill the appropriations, allocations, or other funds available to the Department of the Treasury and to the War Assets Administration for the functions transferred.

(e) Regrouping of property-management functions.-Under this subsection the Federal Works Administrator, in order effectively to manage Government property under the terms of this bill, is authorized to reorganize the several constituents of the Federal Works Agency, to regroup and distribute propertymanagement functions within the Agency.

(f) Functions retained in the Treasury.-This subsection permits the Bureau of the Budget to retain in the Treasury Department certain minor functions of the Bureau of Federal Supply, for example, as to printing, which properly pertain to the Treasury Department.

Section 102. Procurement, warehousing, and related activities

(a) Centralized control. This subsection authorizes the Federal Works Administrator, where it is advantageous to the Government, to regulate the policies and methods of executive agencies in procuring personal property and nonpersonal services and in warehousing, stocking, transporting, and distributing property. The Administrator may himself procure such personal property and nonpersonal services, may consolidate and operate or arrange for the operation of suitable warehouses, repair shops, and similar facilities, and may advise executive agencies on traffic management and represent them in negotiations with carriers and in proceedings before carrier regulatory bodies. (The provisions with respect to traffic management and representation did not appear in the 1948 bills.) This authority over procurement matters vested in the Administrator is a restatement of authority currently exercised by the Bureau of Federal Supply, except that the control over the purchases of wholly owned Government corporations is new, and that the relationship with the National Military Establishment is somewhat changed. The Secretary of Defense is authorized, unless the President shall otherwise direct, to exclude procurement for the National Military Establishment from control of the Administrator where the Secretary deems exclusion in the best interest of national security. Combat equipment and other items of peculiar importance to the armed forces could thus readily be excluded by the Secretary of Defense. At the same time, the Administrator would be in a better position to serve the armed forces more fully in meeting their other supply requirements, and he can appeal to the President if he thinks the Secretary of Defense has wrongly excluded him from any field.

(b) Services to the legislative and judicial branches, and mixed-ownership corporations.-This subsection authorizes the Administrator upon the request of any agency in the legislative or judicial branches of the Government or of any mixed-ownership Government corporation, or the District of Columbia to purchase, warehouse, and distribute personal property and nonpersonal services to meet their needs. Government economy will be furthered by allowing these organizations, supported in whole or in part by the Federal Government, to take advantage of savings in procuring supplies which the Administrator can provide through the operation of a central procurement system.

It is believed that with the exceptions provided in the bill, the system of centralized procurement has proved its efficiency and economy over the years, and, given further statutory support as the bill provides, will do even better in the years to come. This does not mean that every item must be procured by a central agency, only that such an agency must be responsible for determining how every item shall be procured, and for prescribing the manner of procurement which is best in the circumstances.

Section 103. Property utilization

This section deals with the most important phase of property management, which is continuing use by the Government of the Government's property.

(a) Over-all direction of Federal Works Administrator.-This subsection fixes upon the Federal Works Administrator the over-all responsibility to prescribe the policies and methods to promote the greatest use in the entire executive establishment of property which is excess to the needs of one particular establishment and also to provide for the transfer of such property among Federal agencies.

(b) Responsibility of executive agencies to survey property.-This subsection imposes upon each executive agency the responsibility, in the first instance, (i) to maintain adequate inventory controls and accountability systems for its property, (ii) to survey its property continuously to determine which is excess to its needs, and (iii) to care for such excess property.

(c) Responsibility of executive agencies to use property.-This subsection similarly imposes upon each executive agency the responsibility, in the first in

stance, to reassign property among activities within such agency, to transfer its excess property to other agencies, and to obtain for its use property which is excess to the needs of other agencies.

(d) Transfer of property within National Military Establishment. This subsection permits the free transfer of excess property among the Departments of the National Military Establishment under existing provisions of law and proce lures by the Secretary of Defense.

(e) Terms for transfer of excess property.—This subsection generally requires that transfers of e-cess property between Federal agencies shall be at the fair value thereof, as d termined by the Federal Works Administrator. Exceptions are made in the case of a transfer for general distribution among Federal agencies or for disposal as surplus property or where such transfer is otherwise authorized by law without reimbursement. "Transfers for distribution among Federal agencies" refers to instances where property is turned over to the Bureau of Federal Supply for redistribution rather than transferred direct for the use of another agency. When the redistribution occurs the transfer should be at fair value.

(f) Transfer of property within an agency.—Under this subsection transfers of property among activities financed by different appropriations to the same agency must be reported to the Director of the Bureau of the Budget and, in turn, reported to the Congress.

(g) Assignment of office and warehouse space.-This subsection clarifies and strengthens existing law by authorizing the Federal Works Administrator to assign and reassign space in excess real property to any Federal agency for office, storage, or related facilities. He may obtain reimbursement for such assignment in the absence of an appropriation available to him therefor. It is expected that operations under this subsection can and should materially lessen the present leasing of space for Government use in private office buildings.

(h) Abandonment or donation of property. This subsection authorizes the abandonment, destruction, or donation to public bodies, of property having no commercial value, or the estimated cost of care and handling of which would exceed the estimated proceeds from its sale.

Section 104. Disposal of surplus property

(a) Responsibility of Federal Works Administrator.—This subsection provides that the Federal Works Administrator shall have supervision and direction over the disposition of property surplus to the needs of the entire Government. The language of the 1948 bills has been expanded at the suggestion of the War Assets Administration to assure an adequate delegation of congressional authority over the disposal of surplus property.

(b) Care and handling of surplus property.-This subsection provides that the care and handling of surplus property pending its disposition may be performed by the Federal Works Agency or any executive agency appointed by the Administrator. An agency other than the one in possession, however, cannot be designated to perform care and handling without its consent.

(c) Terms of disposal.-This subsection provides that any agency disposing of surplus property may do so by sale, exchange, lease, or transfer, for cash or credit, with or without warranty, and may execute such documents for the transfer of the property as may be necessary.

(d) Title of transferees.-This subsection is designed to protect the interest of bona fide grantees or transferees. It makes instruments purporting to transfer title or other interest in surplus property under this act, which are executed by an executive agency, conclusive evidence of compliance with the provisions of the act.

(e) Advertising for bids.—This subsection provides that surplus property disposals may be made without regard to provisions of existing law for advertising, unless otherwise determined by the Administrator, until December 31, 1949. (f) Adjustments for contractor inventories.-This subsection provides that contractors or subcontractors with executive agencies may be authorized to retain or dispose of their contractor inventories.

(g) Consultation with Secretary of Agriculture. This subsection requires the Administrator to consult with the Secretary of Agriculture in formulating policies for the disposal of surplus agricultural commodities, surplus food processed from agricultural commodities, and surplus cotton and woolen goods, and further requires that such policies shall be formulated to prevent surplus agricultural commodities or surplus food products from being dumped on the market in such manner as to disrupt the market prices for agricultural commodities.