This was necessary because (if the Members will observe) the first line of section 2304 directs that all contracting shall be done "by formal advertising" subject only to the exceptions in the act. Then we come to the first of 17 exceptions to that requirement. This is subsection (1). Section 2304, section (a), subsection (1) may be invoked as authority to "negotiate" for property or services when the "head of an agency" determines that negotiation is "necessary in the public interest during a national emergency declared by the Congress or the President." On December 16, 1950, the President issued the so-called "Korean National Emergency Proclamation" and thereupon the Secretary of Defense directed that the authority for purchasing property or services for the Departments of Defense should be section 2304 (a) (1). You will readily observe that the authority contained in this exception suspends the legal requirement for formal advertising as a pattern, and to a degree the requirements specified in some of the exceptions. I shall not take the time to mention each requirement excepting to say, for example, that in some cases, the decisions to use a particular exception must be made by a Secretary; some delegations of authority are forbidden. Such requirements were intended to centralize responsibility and keep the exceptions from being abused by having their use undertaken only under responsible authority. That was the state of fact and law in 1957. When those hearings were commenced, the Departments protested and, as I have said, agreed to assimilate and follow the provisions of section 2304 by making them a part of the Armed Services Procurement Regulations while retaining legal authority conferred in subsection (1) (suspending the Act during a national emergency) for use in certain matters not specifically covered by the act itself. For example, it was contended by the Department that in the absence of this authority, section 2304 (a) (1), the following acts could not be done: Bear in mind, please: 1. A program for set-asides to be sold only by small business. 2. Authority to place contracts in "labor surplus areas" as determined by other statutes. 3. The authority to purchase nonperishable subsistence. 4. The authority to delegate to subordinates certain types of contracting which has been limited to $25,000 to increase the dollar level to a more reasonable basis in the current market. 5. The authority to purchase without regard to formal advertising was raised from $1,000 to $2,500. Therefore, since 1957, we have been operating under procurement regulations which, with these 5 exceptions, are the same as the text of the act. Now, at this point, I introduce and call to the committee's attention Mr. KILDAY. Before you do that, could I get straightened out on something? Mr. VINSON. Yes. Mr. KILDAY. These five that you mentioned here: That was the contentions made by the Department? Mr. VINSON. That is right. Mr. KILDAY. Was any action taken then? Mr. VINSON. Yes. Mr. KILDAY. With reference to the statutory regulations? Mr. VINSON. I am going to call your attention to how the committee tried to correct it. I introduced a bill dealing with this matter. This was the second bill I introduced. On January 30, 1956, the committee, from the Committee on Armed Services, submitted the following report: Now, this was a bill dealing with the taking away from the authority to make contracts on the national emergency declared by the President and tried to put it on a national emergency declared by the Congress. And in this bill I included these five exceptions, because they had testified here. Now, that bill was passed by the House, by a vote of 374 to 2, and it went over to the Senate. And on account of these five provisions in there, we were unable to ever get a hearing before the Senate. Now I am going to put-to keep it chronologically, the history, I am going to ask to incorporate in the hearings the report that was submitted by the Armed Services Committee on January 30, 1959. Now, here it is. (The material referred to follows:) [H. Rept. 1688, 84th Cong., 2d sess.] AMENDMENTS TO ARMED SERVICES PROCUREMENT ACT OF 1947. JANUARY 30, 1956.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. VINSON, from the Committee on Armed Services, submitted the following REPORT [To accompany H.R. 8710] The Committee on Armed Services, to whom was referred the bill (H.R. 8710) to amend the Armed Services Procurement Act of 1947, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass. The amendment is as follows: On page 3, lines 16 and 17, strike "62 Stat. 22" and insert in lieu thereof "69 Stat. 547". LEGISLATIVE HISTORY In the 80th Congress, this committee consolidated into a single act, all of the laws relating to military procurement. This act is designated as the Armed Services Procurement Act of 1947, being the act of Congress approved February 19. 1948. The declared purpose of the committee in recommending the legislation was stated in the report to be the reestablishment of the "requirement that the advertised competitive method shall be followed by these Departments (Army and Navy) in placing the great majority of their contracts for supplies and services" 55096-602 since the committee was of the firm belief that "as a general matter, this method gives the best assurance that "(a) the Government as a purchaser will receive the best bargain available, and "(b) suppliers in a position to furnish the Government's requirement will have a fair and equal opportunity to compete for a share in the Government's business (H. Rept. 109, 80th Cong., 1st sess., accompanying H.R. 1366. dated March 10, 1947, p. 3)." The Armed Services Procurement Act of 1947 has not been amended since its enactment, save for an amendment (which will be hereinafter referred to) which was passed by the 84th Congress as a part of Public Law 268, 84th Congress, adding a new section 3(c), effective July 31, 1955. For the reasons hereinafter stated, this committee in H.R. 8710, recommends repeal of this amendment. METHOD OF MILITARY PROCUREMENT SINCE 1953 Congress has not reviewed the procurement procedures under the act since the date of enactment. On December 16, 1950, the President, by Proclamation No. 2914, declared a national emergency, hostilities having broken out in Korea at that time. One effect of this proclamation was to invoke section 2(c) (1) of the act whereby the advertised competitive bidding process could be suspended for the duration of such emergency (H. Rept. 109, p. 7, sec. i). In providing this exception in 1947, the committee stated in its report that it was concerned that "any future war" might start with great suddenness and "that minimum preparedness required that legislative be available to permit the shedding of peacetime requirements simultaneously with the declaration of any emergency by the President." On December 18, 1950, the Department of Defense issued a directive implementing the President's emergency proclamation and authorizing negotiated procurement. Hostilities in Korea terminated by an armistice agreement on July 27, 1953; but the Armed Services Procurement Regulations issued by the Department of Defense until January 1, 1956, cited and authorized the use of the Korean proclamation and the suspension of the advertised competitive procurement procedures specified in the act for contracting within the several military establishments. In October 1955, the committee. became concerned with the number of contracts coming to its attention which were the result of negotiation instead of advertised competitive bidding the latter being the basic policy method prescribed in the act. An inquiry was begun and the several military departments responded with figures showing the dollar volume of advertised competitive procurement and that of negotiated procurement under the emergency authority in section 2(c) (1). The figures furnished were taken from monthly reports made within the several military establishments. The committee was alarmed at the extensive use of this exception both in dollar amount and in numbers of contracts. Those figures are as follows: Comparison of procurement by negotiation versus advertised competitive bidding from Jan. 1, 1953, through June 30, 1955, by dollar value and number of actions of net procurement by pegotiation under sec. 2(c)(1), Armed Services Procurement Act of 1947 to net procurement by advertised bids 1 See app. A for detailed data submitted by Department of the Army. (e) This section shall not be construed to (A) authorize the erection, repair, or furnishing of any public building or public improvement, but such authorization shall be required in the same manner as heretofore, or (B) permit any contract or the construction or repair of buildings, roads, sidewalks, sewers, mains, or similar items to be negotiated without advertising as required by sec. 3, unless such contract is to be performed outside the continental United States or unless negotiation of such contract is authorized by the provisions of par. (1), (2), (3), (10), (11), (12), or (15) of subsec. (c) of this section." See app. A for detailed data submitted by Department of the Army. 1 See app. C for detailed data submitted by Department of the Air Force. DISCUSSION OF COMMITTEE AMENDMENTS 1. AMENDMENT OF SECTION 2 (C) (1) Section 2(c) (1), as amended by this bill, will confine the suspension of advertised competitive procurement to such periods of national emergency "as are declared by the Congress,” instead of national emergency power being vested in the President as well. When the original act was passed, the provision concerning a national emergency declared by the President was inserted in an atmosphere of peace following the sudden onset of World War II. That power was intended by the committee to be used only in a real emergency. But, in practice, this provision has been used for other purposes and reasons. In the present state of progress it cannot be validly argued that it is difficult to obtain congressional action through the prompt action of the Congress. Moreover, no situation could be of such an emergent character that time could not intervene between a precipitate emergency and the convening of the Congress. If all else should fail, there are provisions in subsection 2(c) (2) for the use of negotiations in a "public exigency which would not admit of delay." Certainly this latter authority is sufficient for the time which might intervene between a sudden emergency and the convening of Congress. By removing this Presidential authority provision, we restore to military procurement the basic principles of advertised competitive bidding as the rule and not the exception. We require that this act be administered as it was intended to be administered in a peacetime economy. It was never considered that the emergency provisions would be utilized to sustain programs, however laudable, wholly without the cognizance of this committee and the military departments. These programs, however well conceived in themselves, should be judged on their merits and ought to be specifically implemented by the Congress. 2. AMENDMENT OF SECTION 2 (C) (3) While under review, we concluded that the limitation of $1,000 in section 2(c) (3) was hampering economical procurement. The Comptroller General agrees with us. He and we are of the opinion that a limit of $2,500 in single purchases would be a more realistic limitation, in the current state of our economy, than would a limitation of $1,000. It has been pointed out that the paperwork involved in a procurement is the same whether it be of $1,000 purchase or one for many thousands of dollars. The Department of the Army testified that its numerous procurements under this exception averaged $130. The Comptroller General has established a different standard for procurements under $5,000. In these circumstances, we feel that, while the subject is under review, it is advisable and in the interests of economy and efficiency, to raise the limit set out in section 2(c) (3) to $2,500. 3. AMENDMENT OF SECTION 2 (C) (9) We have amended section 2(c) (9) to provide that nonperishable subsistence items may also be purchased by negotiation. The Department of the Army has testified, very convincingly, upon this procurement program which it operates for all three services. The method employed by the Quartermaster Corps at its 10 procurement centers, comes under the general heading of "Negotiated Procurement" as distinguished from advertised competitive procurement. But in a true sense, it is a mixture of both. The actual process is for quotations to be received at the Army centers at a certain day and time. Whether the bid be received by telephone, telegraph, letter, or in person, the process is substantially the equivalent of a deposited bid, at a time certainly stated and a price irrevocable for the period of the commitment. And no one is prohibited from bidding. And procurement needs are publicized extensively. We have never had a complaint on the operation of this system. Since passage of the act in 1947, there has been a change in the marketing system for nonperishable substances, such as canned goods. The introduction into the market of frozen foods and other methods of packaging and marketing has changed the requirements and placed military procurement at a disadvantage in this competitive field. To permit abandonment of the strict form of |