both in time and in experience from and after the enactment of section 3709 of the Revised Statutes. This law is, I say, the basic authority; and we will have occasion during the course of this hearing to refer to it many times. It was originally Public Law 413. Mr. BATES. Whose statement is this? Mr. VINSON. This is my statement. Mr. BATES. That is what I want to know. You used the word "I". Mr. VINSON. We use the word “I” in everything here. The statement was fixed up as we normally do. Mr. BATES. Is it "we" or "I"? What is it going to be? Mr. VINSON. This is my statement. Mr. BATES. Or the committee statement? Mr. VINSON. It is my statement to the committee. Mr. BATES. To the committee. Mr. VINSON. That is right. We will later on refer to that background. The law has now been codified as chapter 137 of title 10. We shall have occasion to refer particularly to section 2304 because this section, which consists of a basic authority and policy and 17 exceptions to that basic authority, is expressive of governmental policy; that is, of the means and the legal methods by which contracting can occur. I will venture one observation, at this time, with respect to the act, and that is this: Notwithstanding the explosion of technocracy into the myriad new weapons and methods of defense, we have not yet had to amend this basic act. That suggests to me that its authority is broad; even though there are many differing definitions and exceptions. In 1957-now, members, listen to this: In 1957, I directed an inquiry and a report was made and studied by the Committee on Armed Services which showed what I considered an alarming tendency to "negotiate" Government procurement, almost to the exclusion of the sealed and advertised bidding process which is as old as Government itself. At that time, some 92 percent of the dollar value of all contracts were being negotiated. I have spoken of this act as an attempt at consolidation into one statute all of the requirements for flexibility in procurement so far as the grant of authority is concerned. But you will note that under the act, the competitive sealed advertised bid is the pattern; and everything else is considered, as a matter of public policy, in derogation of this power; and is to be considered the exception rather than the rule; and to be used on a limited basis or for a limited time or for a specific purpose. Note that there are 17 exceptions which we will discuss in the course of this hearing. The events of 1957 before the committee were these: Two corrective bills were introduced to stem the tide of negotiated contracts. At the time of the hearings, the Defense Department undertook to recast its procurement procedures, to conform by assimilation into the Armed Services Procurement Regulations the policies and the practices set out in the act of 1957. 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 ! See app. A for detailed data submitted by Department of the Army. ? See app. B for detailed data submitted by Department of the Navy. 1 See app. C for detailed data submitted by Department of the Air Force. *"(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. |