included in the Federal Motor Vehicle Safety Standards. We will continue to include in our purchase specifications for trucks safety requirements until the Department of Transportation extends the Federal Motor Vehicle Safety Standards to cover those vehicles, at which time we will remove the requirements from our specifications.

MODEST PRICE INCREASES

With regard to the prices which we have paid for vehicles during the last 2 fiscal years and the current fiscal year, there have been modest increases, but we have no means available of identifying the cause. I should like to turn now to the proposed legislation (S. 2865) which we have carefully considered from the standpoint of its effectiveness in accomplishing the intended purposes and also its potential effect on our ability to purchase vehicles required to meet the operational needs of Government agencies. Our review has revealed certain problem areas which are cause for some concern on our part.

Pursuant to a request by the Committee on Commerce we asked the major automobile manufacturers in March 1966 to furnish information concerning the costs of the automotive safety features required by GSA standards. Although some of the manufacturers supplied a limited amount of information they were, for the most part, either unable or unwilling to comply with our request.

CAR MAKERS 'RELUCTANT' TO FURNISH DATA

In view of this past experience, we are of the opinion that the manufacturers may be reluctant to furnish such data in connection with future procurements. Since the Government's procurement of motor vehicles is insignificant when compared to total industry sales and since the statutory limitations on the prices the Government pays for passenger vehicles leaves little room for profit, we would expect that the manufacturers would prefer to forego doing business with the Government rather than to provide the data. In this connection we must call to your attention that on our most recent volume procurement of passenger vehicles bid was received from only one manufacturer.

If these expectations materialize, the result could be a most serious disruption of many Government activities. Nonavailability of needed vehicles could seriously impair mail deliveries, law enforcement, internal security, space programs, international affairs, and many other significant programs.

BIG THREE NOT BIDDING

Senator RIBICOFF. May I interrupt you there. Which company is it that makes the bid? Which is the sole company making the bid on the automobiles?

Mr. ABERSFELLER. American Motors.

Senator RIBICOFF. Are you saying that the Big Three automobile manufacturers are not submitting bids to the Government?

Mr. ABERSFELLER. On passenger cars, on sedans and station wagons they are not.

Senator RIBICOFF. Are you implying that if the automobile companies are required to indicate the price of safety standards that they would institute a boycott against selling automobiles to the U.S. Government?

Mr. ABERSFELLER. I am not too sure, Mr. Chairman, that boycott is the proper description.

Senator RIBICOFF. What would you call it?

Mr. ABERSFELLER. But I would say it is our view that they probably would not bid.

Senator RIBICOFF. In other words, you think that a basic industry of the United States, if required to comply with a law passed by the Congress of the United States, concerning the price of safety features in the automobiles, would be in the position to blackjack the United States of America?

Mr. ABERSFELLER. Again, Mr. Chairman, I do not want to share the word "blackjack."

Senator RIBICOFF. Well, we will use whatever term you want to call it.

COMPANIES MAY NOT NEGOTIATE WITH GSA

Mr. ABERSFELLER. An instant case of interest is a recent decision known as the Hewlett Packard decision. This decision went to the heart of disclosing commercial pricing to the General Accounting Office. The matter was contested by the company and went to the courts. The courts ruled that the General Accounting Office did indeed have a right to look into the company's commercial pricing practices. We have since been informed by several automobile manufacturers that they will no longer negotiate with us because of this decision.

This particular clause that became a cause celebre, only appears in the negotiated contracts. One motor company as late as yesterday told me they had not decided whether they would or would not bid on negotiations. I must hasten to add that we do not, as a normal course of business, negotiate. We do, rather, invite bids, but there are occasions on which we need to negotiate and I am specifically referring now to law enforcement activities where we do not want our law enforcement agencies identified by a given make or model of vehicle. More significantly than that, in our foreign affairs, we have in many countries of the world, in Africa specifically, standardized design on certain makes and models of automobiles. This standardization is authorized under a section of the Federal Property Act known as section 302 (c) 13, and provides for standardization for reasons of economy. The economy involved here is that only one spare parts list, one maintenance training program for indigenous personel, et cetera, is required.

GSA BELIEVES COMPANIES WILL NOT COOPERATE

This lack of ability on our part to negotiate has caused us great concern and leads us to believe that the automobile industry would not provide the information sought by the bill. We do not know how the automobile industry will react to the bill but you said earlier this morning, in fact so stated in your report, that they had refused to provide that information to you. I am not naive enough to feel that if they refuse to give it to you, that they are going to give it to us. If the up

shot of that inaction would be that we would be unable to buy vehicles, then in my view we would be doing serious harm to the orderly operations of the Government.

Senator RIBICOFF. Well, I mean your statement is most amazing. What you are saying is that an industry that is a virtual monopoly in this country will refuse to do business with the U.S. Government on vehicles that the U.S. Government needs for its orderly processes unless the Federal Government complies with what the industry thinks are the questions and standards that should be asked of it?

Mr. ABERSFELLER. Mr. Chairman, I did not mean to imply they would not. We have a deep suspicion that they would not, the

S. 2865 COULD AFFECT GSA CAR BUYING

Senator RIBBICOFF. Experience indicates so far that this is what they have done and what they would do in the future. In other words, as I understand your testimony, you are reluctant to see a law like this passed because you feel that the passage of a law requiring the disclosure of safety, the price of safety features in an automobile, would mean that the U.S. Government would not be able to procure the automobiles it needs to run its affairs?

Mr. ABERSFELLER. That is part of our feeling; yes, sir.

Senator RIBICOFF. In other words, you are not testifying whether this is a good law or a bad law, whether it is in the public interest or not in the public interest, but what you are really saying is that you are faced with a monopoly situation and you are against this law because you fear that it will prevent you from procuring automobiles for the U.S. Government?

Mr. ABERSFELLER. Yes, sir. I might point out, Mr. Chairman, that this and let me digress for just a moment, is not necessarily restricted to the automobile industry. There are other industries with whom we deal where we do a larger amount of business-larger amounts of merchandise than we do in the case of automobiles, and they are equally reluctant to provide cost data. Unfortunately the requirements leveled in the procurement regulations always require the contracting officer to get the information and there is no requirement which requires the manufacturer to provide it. The industry which I now reference is the automatic data processing industry. We are obliged on occasion to waive the requirements of the Truth in Negotiations Act, a law passed by Congress, because we are refused information with regard to the cost and pricing data attendant to the procurement of automatic data processing equipment. I simply point that out that while there are not many, there are other industries with whom we have the same kind of problem and the same kind of concern.

CONCERNS REFUSE TO SUPPLY REQUIRED DATA

Senator RIBICOFF. In other words, the Federal Government is in a completely subordinate position. You are not telling them what they should charge you, but they refuse to give you the information so you can make comparative conclusions as to value of what you are receiving.

Mr. ABERSFELLER. That is correct; yes, sir.

Senator RIBICOFF. How widespread is this in government?

Mr. ABERSFELLER. Well, at the moment the most significant one I have mentioned is in automatic data processing equipment procurement.

Senator RIBICOFF. I would say this is what you are testifying today, is this generally known to the public or is this the first time you have disclosed it?

Mr. ABERSFELLER. We testified to this point with Senator Proxmire, Joint Economic Committee, because he, too, is deeply concerned about the inability of the Government to find out exactly what it is paying for in its own procurement. There are occasions where we do need certain kinds of computers which only some companies make and we have not been able to get the detailed cost and pricing data that we think is necessary to make a proper judgment as to prices.

Senator RIBICOFF. Now, in this latest procurement request for bids, how many passenger vehicles were involved?

GSA BOUGHT 3,177 VEHICLES

Mr. ABERSFELLER. The last procurement was for 3,177. These are sedans, Mr. Chairman, I am speaking of.

Senator RIBICOFF. What is the value of an order of 3,000 sedans? Mr. ABERSFELLER. The contract was awarded for $1,500, so that would be about $5 million.

Senator RIBICOFF. Would $5 million be considered a pretty good order for an automobile manufacturer?

Mr. ABERSFELLER. Well, not being in the business I do not really know, but I would think so, Mr. Chairman, yes, sir.

Senator RIBICOFF. Is there prestige involved, too, for an automobile company to have its automobiles used by the Government? Mr. ABERSFELLER. I would think so; yes, sir.

SPECULATION ON FAILURE OF COMPANIES TO BID

Senator RIBICOFF. How do you explain then, the failure of the other automobile companies to make a bid?

Mr. ABERSFELLER. There is one possible explanation outside of a number of others that would be pure speculation on my part and that is that we are possibly approaching the ceiling of the limitation. The limitation on sedans is $1,500 and it may well be that the automobiles that the competing manufacturers provide are costing them more than $1,500 to produce. I just do not know.

Senator RIBICOFF. But is this a statutory limitation?

Mr. ABERSFELLER. It is a statutory limitation, yes, sir.

Senator RIBICOFF. I mean the automobile manufacturers told you that this is the reason why

Mr. ABERSFELLER. No they have not. In fact, we have asked and we have been told that they might tell us later. What we were trying to find out, Mr. Chairman, is whether we ought to seek an increase in the limitation.

Senator RIBICOFF. But if they came in to you and discussed their problem with your frankly, I am sure the Federal Government does not want to buy merchandise from any manufacturer at a loss to the manufacturer.

Mr. ABERSFELLER. That is correct.

Senator RIBICOFF. If they indicated to you that this was the reason, wuold you then go to the proper elective authorities and ask that the limitation be raised?

Mr. ABERSFELLER. Yes, we would.

Senator RIBICOFF. Frankly, I would expect that the automobile manufacturers when they come in here to testify would indicate why they refuse to bid on an order of 3,000 cars at $5 million. They are supposed to be competitive. I do not imagine they have many customers to whom they sell 3,000 automobiles at one clip. Are there many in this country?

GOVERNMENT AT "MERCY" OF MANUFACTURERS

Mr. ABERSFELLER. Outside of the leasing companies, such as Hertz and Avis and other car-leasing firms, I would not think so. But I truly do not know, Mr. Chairman.

Senator RIBICOFF. Do you feel, then, that the Government is completely at the mercy of an American manufacturer in all its procurement policies?

Mr. ABERSFELLER. As it relates to procurement, Mr. Chairman, yes. Senator RIBICOFF. How long have you been in the procurement end of the Government?

Mr. ABERSFELLER. I am going into my 23d year of Government service and at one time or another in those entire 23 years, I have been involved in procurement.

Senator RIBICOFF. How would you suggest from your accumulated experience that the Government be in a position where it is not faced with a gun to its head as to what it will buy and how it will buy it and whether it can buy it? What alternatives does the Government have?

Mr. ABERSFELLER. Well, there are some alternatives, Mr. Chairman, but I do not think they are really wise ones. One, of course, would be to require the industry to bid which I think would be a

ADVANTAGE TO THE VOLUME BUYER

Senator RIBICOFF. To require what?

Mr. ABERSFELLER. Require the industry to bid on Government procurements which I think would be a mistake. I think what we have before us is a rather simple fact of business practice-since we buy less than six-tenths of 1 percent of all the motor vehicles produced and there is always a question as to how far any producer of goods will go if any purchaser buys that insignificant a quantity.

On the other hand, where we do buy substantial quantities of goods from given producers, we do drive hard bargains. We are able to. We have the whiphand and up to the point of reasonableness, we use that.

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