forms, blankbook work, standard specifications and other printed material not available through the Superintendent of Documents and generally used by a number of Federal agencies.

Section 2 (a) of Public Law 754 amended clause (2) of the final sentence of this subsection to read as above. This modification substantially eliminated the surcharge on General Supply Fund transactions and provided for charging requisitioning agencies only with the purchase price, transportation to the first storage point of supplies and services, and direct labor costs for the repair, rehabilitation, and conversion of personal property. Subsection (c) of section 2 of Public Law 754 provided that this amendment "shall be effective on the date, not earlier than July 1, 1950, on which the Administrator of General Services shall determine that appropriated funds adequate to effectuate" the purpose of such amendment have been made available. Such determination was made by the Administrator effective July 1, 1951.

The inclusion in the assets composing the General Supply Fund of "the value, as determined by the Administrator, of inventories of personal property from time to time transferred to the Administrator by other executive agencies under authority of section 201 (a) (2) to the extent that payment is not made or credit allowed therefor" (second sentence of this subsection) was made by subsection (c) of section 1 of Public Law 522 of the 82nd Congress, approved July 12, 1952. Under section 201 (a) (2) the Administrator has the authority to take over and operate the warehouses, supply centers, repair shops, fuel yards, and other similar facilities of executive agencies. Whenever he takes over such a facility, he must also take over the inventory and thereafter continue to supply the affected executive agency. Pursuant to this amendment made by Public Law 522, so far as the value of such inventories can be used to augment the Fund, the capital necessary for the resultant expanded operations can be provided without additional appropriations. This amendment should promote a more effective Federal supply system through greater utilization of existing Government supply inventories and expansion of the consolidated procurement operations, carried on by the General Services Administration through the General Supply Fund.

In line with the increase of the assets composing the General Supply Fund by the value of the aforementioned inventories, subsection (d) of section 1 of Public Law 522 increased the ceiling on the authorized capital of the General Supply Fund from $75,000,000, as set in Public Law 152 as originally enacted, to $150,000,000.

(b) Pricing; payment by requisitioning agencies.-The third sentence of this subsection as originally enacted in Public Law 152 reads as follows: "On and after such date, such prices shall be fixed at levels so as to recover so far as practicable all costs except those which are determined by the Administrator with the approval of the Director of the Bureau of the Budget to be indirect or overhead costs." The final sentence of this subsection as originally enacted in Public Law 152 reads as follows: "Where an advance of funds is not made, requisitioning agencies shall promptly reimburse the General Services Administration on vouchers prepared by the requisitioning agency on the basis of itemized invoices submitted by the Administrator and receiving reports evidencing the delivery to the requisitioning agency of such supplies or services: Provided, That in any case where payment shall not have been made by the requisitioning agency within forty-five days after the date of billing by the Administrator, reimbursement may be obtained by the Administrator by the issuance of transfer and counterwarrants supported by itemized invoices." This subsection as originally enacted thus provided for the fixing of prices until July 1, 1950, of supplies and services sold from the General Supply Fund under the laws and regulations applicable on the date of enactment of Public Law 152, and after July 1, 1950, on the basis of recovering only the direct costs as outlined in connection with subsection (a) above. Reimbursement procedures were simplified by giving increased scope to the advance payment method of financing purchases from the fund, and by substantially reducing certain cumbersome and costly alternative procedures. The revised reimbursement procedures gave effect, to the fullest extent practicable, to sound accrual accounting principles so that the books of the purchasing agencies would more accurately reflect the value of supplies and services actually received, and thus further the program to improve accounting throughout the Government. Prompt processing of reimbursements is essential to the successful operation of the program. To insure against undue delay, provision was made for reimbursement of the fund by transfer and counterwarrant if payment be not made by a requisitioning agency within 45 days after billing.

Section 2 (b) of Public Law 754 amended the third sentence of this subsection to read as above. This modification fixed the applicable standard for pricing

General Supply Fund commodities based upon the purchase price, initial freight expense, inventory losses, personal services employed directly in repair, rehabilitation, and conversion, and amortization and repair of equipment leased or rented to executive agencies. As to inventory losses, the intention of the amendment is that those caused by catastrophes or other extraordinary events will be recouped by supplementing the General Supply Fund rather than by including such losses in the pricing of General Supply Fund commodities pursuant to the amended subsection. Section 2 (c) of Public Law 754 made this amendment "effective on the date, not earlier than July 1, 1950, on which the Administrator of General Services shall determine that appropriated funds adequate to effectuate" the purpose of the amendment have been made available. Such determination was made by the Administrator effective July 1, 1951.

Section 3 (a) of Public Law 754 amended the final sentence of this subsection to read as above. This amendment modified the subsection so as to provide for the reimbursement to the General Services Administration, where an advance of funds is not made, out of funds of the requisitioning agency in accordance with accounting procedures approved by the Comptroller General rather than, as was provided by the subsection prior to the amendment, on vouchers prepared by the requisitioning agency on the basis of itemized invoices submitted by the Administrator and receiving reports evidencing the delivery to the requisitioning agency of such supplies or services. The amendment further modified the subsection so that where the requisitioning agency shall not have made payment within forty-five days after the date of billing by the Administrator or the date on which an actual liability for supplies or services is incurred by the Administrator, whichever is the later, reimbursement may be obtained by him by the issuance of transfer and counterwarrants or other lawful transfer documents supported by itemized invoices. The subsection as it stood prior to this amendment did not include reference to the date on which an actual liability for supplies or services is incurred by the Administrator, or to other lawful transfer documents.

(c) Crediting of fund.-This subsection provides that the General Supply Fund shall be credited with all reimbursements, advances, and refunds relating to supplies or services procured though the fund, including the net proceeds of disposal of surplus property of the fund. It substantially reenacted existing law. Since the General Supply Fund is a revolving fund, it is appropriate that these moneys be so credited in the interest of smoothness of its operation and to avoid its depletion.

(d) Establishment of special deposit account with Treasurer of United States.Under this subsection the most effective utilization of cash resources of the fund is provided for, by authorizing the establishment of a special deposit account into which all advances and fund receipts may be deposited, and from which payments may be made immediately. Under this simplification of previous collection and disbursement procedures applicable to the fund, cash will be available for use promptly after collection, without sacrificing any necessary controls.

(e) Covering of surplus into Treasury; audit and report by Comptroller General. This subsection alters the previous requirement that all surplus in the fund, as determined in the annual audit by the Comptroller General, must be covered into the Treasury as miscellaneous receipts, by permitting losses incurred by the fund in prior years, as well as all assets and liabilities, to be considered in ascertaining the amount of such surplus. This change takes cognizance of the fact that such prior losses represent impairments of the fund capital, unless made good from earnings, and also will counteract any tendency to establish prices at too high a level. Also, there is added the requirement that the Comptroller General report to the Congress annually the results of the audit. Such reports, and his recommendations as to the status and operations of the fund, should be helpful to the Congress in its consideration of supply activities.

(f) Procurement for certain organizations. This subsection makes the procurement facilities of the fund available to mixed-ownership Government corporations, to the municipal government of the District of Columbia, and, in certain cases, to non-Federal agencies. Procurements under this subsection are subject to the requirements of subsection (a) to (e), inclusive, of section 109. In Public Law 152 as originally enacted, there appeared at the end of subsection (f) a proviso reading as follows: "Provided, That the prices charged by the Administrator in such cases shall be fixed at levels which he estimates will be sufficient to recover, in addition to the direct costs of the procurement, handling, and distribution of such supplies and services, the indirect and over

head costs that the Administrator determines are allocable thereto." This proviso was deleted by subsection (e) of section 1 of Public Law 522. Such deletion removed the special surcharge assessed against mixed-ownership Government corporations, the District of Columbia and certain requisitioning non-Federal agencies procuring supplies and services from the General Services Administration. These organizations, therefore, now pay the same prices as do Federal agencies for similar supplies and services received from the General Services Administration.

(g) Testing of articles, and testing fees.-This subsection was added to section 109 by section 3 (b) of Public Law 754. The subsection authorizes the estab lishment of testing charges to be paid by prospective vendors to cover all or part of the costs in connection with the testing of articles and commodities tendered for sale. Such testing fees are to be covered into the General Supply Fund and expended directly therefrom without appropriation. The Administrator is authorized, in his discretion, and with the consent of the producer or vendor, to conduct tests on goods required by the Government to ascertain whether they are equal or superior in performance standard to similar goods currently on a qualified list, and therefore acceptable for Government purchase. This subsection provides for two different types of charges which may be assessed against a producer or vendor: (1) for full recovery of the cost of conducting such test when the testing service is predominantly in the interest of the producer or vendor; and (2) for such fee as the Administrator considers to be "reasonable" for the furnishing of the testing service when it is not predominantly in the interest of the producer or vendor. In the first case, provision is made for the recovery of the actual cost of services rendered by the Federal Government in the interest of special beneficiaries rather than in the general public interest, while in the second, the Administrator, having determined that the tests made were primarily in the interest of the Federal Government in order to ascertain the quality of a product desired by the Government or offered to it, may assess the fees accordingly. The latter situation would allow, in some instances, for the assessment of the larger part but not all of the costs against the producers, in others, for equal participation of the Government in the costs, and in still others, for the Government to defray the preponderance of, or the entire costs if the public interest would be served thereby.

Under this subsection small business will be afforded a better opportunity to have its products considered for purchase by the Government. If such products are found to be equal or superior in performance characteristics to products on the Federal list of acceptable products, when compiled and released by the Administrator, they may be similarly classified and listed as conforming to the requirements of the Government. The language is broad enough to permit the Administrator, in his discretion, to utilize Federal testing facilities or the facilities of private testing laboratories in determining the qualities of products and their conformity to required standards of the Government. Thus the Administrator may include on such qualified list many products of small private industries which the Government could use advantageously and which will prove to be as satisfactory on a performance basis as similar products which meet exact technical specifications. The subsection will help to overcome the difficulties small businesses have encountered in having the Government accept their products on the same basis as those which were hand-tailored to meet specialized requirements, and will permit agencies of the Government to purchase goods which more nearly conform to their needs.

TITLE II-PROPERTY MANAGEMENT

PROCUREMENT, WAREHOUSING, AND RELATED ACTIVITIES

SEC. 201. (a) The Administrator shall, in respect of executive agencies, and to the extent that he determines that so doing is advantageous to the Government in terms of economy, efficiency, or service, and with due regard to the program activities of the agencies concerned

(1) prescribe policies and methods of procurement and supply of personal property and nonpersonal services, including related functions such as contracting, inspection, storage, issue, property identification and classification, transportation and traffic management, management of public utility services, and repairing and converting; and

(2) operate, and, after consultation with the executive agencies affected, consolidate, take over, or arrange for the operation by any executive agency of warehouses, supply centers, repair shops, fuel yards, and other similar facilities; and

(3) procure and supply personal property and nonpersonal services for the use of executive agencies in the proper discharge of their responsibilities, and perform functions related to procurement and supply such as those mentioned above in subparagraph (1): Provided, That contracts for public utility services may be made for periods not exceeding ten years; and

(4) with respect to transportation and other public utility services for the use of executive agencies, represent such agencies in negotiations with carriers and other public utilities and in proceedings involving carriers or other public utilities before Federal and State regulatory bodies;

Provided, That the Secretary of Defense may from time to time, and unless the President shall otherwise direct, exempt the National Military Establishment from action taken or which may be taken by the Administrator under clauses (1), (2), (3), and (4) above whenever he determines such exemption to be in the best interests of national security.

(b) The Administrator shall as far as practicable provide any of the services specified in subsection (a) of this section to any other Federal agency, mixed ownership corporation (as defined in the Government Corporation Control Act), or the District of Columbia, upon its request.

(c) In acquiring personal property, any executive agency, under regulations to be prescribed by the Administrator, may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in such cases in whole or in part payment for the property acquired: Provided, That any transaction carried out under the authority of this subsection shall be evidenced in writing.

ANALYSIS

Section 201. Procurement, warehousing, and related activities (Sec. 201, 63 Stat. 383, as amended by sec. 8 (b), 64 Stat. 591; 40 U. S. C. 481)

(a) Centralized control. This subsection authorizes the Administrator of General Services, where it is advantageous to the Government, to regulate the policies and methods of executive agencies with respect to the procurement and supply of personal property and nonpersonal services, including related functions such as contracting, inspection, storage, issue, property identification and classification, transportation and traffic management, management of public utility services, and repairing and converting. The Administrator may himself procure such personal property and nonpersonal services and perform related functions, and may consolidate and operate or arrange for the operation of suitable warehouses, repair shops, and similar facilities. (When functions are transferred to the General Services Administration from any other Federal agency under this subsection, the records, property, personnel, and funds relating to the transferred functions are to be transferred to the Administration in the manner provided in section 107 (b).) The Administrator may for the use of executive agencies represent such agencies in negotiations with carriers and other public utilities, and in proceedings before regulatory bodies involving carriers and other public utilities. The provisions with respect to traffic management, management of public utility services, and representation are the basic charter governing the activities and responsibilities of the Transportation and Public Utilities Service established by the Administrator within the General Services Administration. These provisions are, however, not intended to abrogate any authority of the Department of Justice with respect to legal proceedings, are in accordance with the recommendations of the Commission on Organization of the Executive Branch of the Government, and provide a clear authority in the General Services Administration on this subject.

The Administrator is authorized to negotiate contracts for public utility services, for agencies and departments, where it is deemed advantageous to the Government, for periods not exceeding 10 years. The purpose of this provision is to permit the Government to take advantage of discounts which may be obtained only under authorized contracts for periods of longer than 1 year, particularly under contracts for electric power requirements.

This authority over procurement matters vested in the Administrator is a restatement of authority previously exercised by the Bureau of Federal Supply, except that the control over the purchases of wholly owned Government corpoations is new, and that the relationship with the Department of Defense is somewhat changed. (The designation "National Military Establishment" was changed to "Department of Defense" by sec. 12 (a), 63 Stat. 591.) The Secretary of Defense is authorized, unless the President shall otherwise direct, to exclude procurement for the Department of Defense from control of the Administrator where the Secretary deems exclusion in the best interest of national security. On July 1, 1949, by letter the President did so "otherwise direct", and the Secretary of Defense accordingly did not exercise his privilege to exempt the Department of Defense.

On June 8, 1954, the President revoked the foregoing letter of July 1, 1949. Thereafter, on October 2, 1954, the Secretary of Defense exempted the Department of Defense from the provisions of this Act in the field of traffic management. This exemption was published in the Federal Register (19 F. R. 6611). Combat equipment and other items of peculiar importance to the armed forces could thus 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. The Committee for Development of Areas of Understanding between the Department of Defense and General Services Administration held that the power of exemption vested in the Secretary of Defense by the proviso to section 201 (a) is not applicable to protection and maintenance of real property of the Department of Defense pending its disposal, which is governed by section 203, and accordingly, as to such property in the possession of the Department of Defense, the Administrator may confer duties upon the Department of Defense with respect thereto regardless of whether the Department of Defense consents. (b) Services to Federal agencies, District of Columbia, and mixed-ownership