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Hon. ROBERT C. BYRD,

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D.C., December 10, 1969.

Chairman, Subcommittee on Deficiencies and Supplementals Senate Appropriations Committee, Washington, D.C.

DEAR SENATOR BYRD: During my appearance before your subcommittee on December 8, 1969, Senator Hruska (who was in the chair at the time) requested that I submit additional material for the record to support the request for a 2.5 million dollar appropriation for the Commission on Government Procurement. As indicated in my statement the original estimate of the scope of work was made by the House Committee on Government Operations in its report on a similar bill in 1967 (Report 90–890):

"The committee has examined the costs and appropriations for a number of other commissions, established both by executive and legislative branch actions. We believe that a reasonable projection of costs of the Commission would be $2 million for the 2-year period of the Commission's life. Compared to other commissions of comparable importance and tenure, this is a quite modest cost projection and one which the committee believes would be a very wise investment. Considering that the Government's procurement bill for a single year approaches $50 billion, it is plain to see that the opportunities for genuine savings will be many and that they will compensate for the costs of the Commission many, many times."

The Committee reaffirmed this approximate scope of effort, as indicated in my opening statement, by the quotation from its most recent report (91-468). According to the records of the Military Operations Subcommittee of the House Government Operations Committee, as related to us by its staff director, Mr. Herbert Roback, the 1967 estimate was based upon the actual costs reported for the two Hoover Commissions. The first Hoover Commission reported costs of 1.9 million dollars and the second Hoover Commission reported costs of 2.8 million dollars, each covering activities over approximately two years. (See Attachment 1) In our review of more recent temporary study commissions we found the 2.5 million dollar figure reasonable in view of the cost estimates for a number of other commissions cited in my statement. I am also attaching breakdown showing the percentage of costs which were expended for staff, contracts, and other objects for a representative sample of such other commissions (Attachment 2). With the exception of the Public Land Law Review Commission and the two Hoover Commissions, the task of the Procurement Commission is of a different nature, and probably more complex, than the tasks assigned the other Commissions.

As you will note from Attachment 2, the two Hoover Commissions operated quite differently with respect to the percentage of total costs devoted to staff as opposed to that used for contractual services. The same is true of the range of percentages shown for the other Commissions shown on Attachment 2. To prescribe now a precise forecast for this Commission is not possible since this will depend on the manner in which it attacks its task. (In turn, this can be heavily influenced by the Commission's knowledge of the funds it has at its disposal and when they are available at the time it makes its plans.) It would appear that the nature of this Commission's work and the time scale would require from 55-70% for staff and 15-30% for contracts with the balance (15%) available for travel, printing, etc. As indicated in the Committee reports on the bill and in my testimony regarding the appropriation the potential savings from improvements in the procurement process can more than offset these costs in a very short time.

It appeared most logical, in this case, to establish both the limitations of time and cost within which the Commission is expected to complete its work. Its task is not to conduct any program actions on behalf of the Government, nor is it empowered to make any decisions-its sole authority is to study the subject and make recommendations for actions to be taken by the Congress or the Executive Branch. The sponsors of the legislation believed it desirable to impose a time limit during which the Commission would conduct its business (2 years plus 120 days from the date of enactment-i.e., November 26, 1969) and to place in the House report a monetary figure indicating the approximate resources believed to be appropriate for the study desired. At the same time the Committee indicated its desired to leave the Commission free to establish its own priorities among the broad list of subjects discussed in the Committee's

report (Attachment 3). The Senate Committee, in its report (91-427), made reference to the two-year limitation on the life of the Commission and took no exception to the House estimate of the approximate costs. Both chambers followed the recommendations of their respective committees without any controversy arising.

If the Commission receives a single appropriation, as requested, it can commence, from the outset, to block out a total program of work, to establish the scope and resource limitations for the various pieces of the study, and how each shall be conducted, to prescribe (with some certainty) the schedules for each portion of the study and a logical progression to be followed from one portion to the next. Work can be started immediately on the first parts of the study. Moreover, in a one-time effort of this nature, it has been my experience that the really capable people most desired for service can be more easily recruited; they can better make the necessary adjustments to their private affairs to enable them to devote the priority attention demanded for the work of the Commission if they can be assured in advance that the assignment is for a known period of time.

If, on the other hand, only a partial appropriation is made now (for purposes of allowing the Commission to get organized and prepare a plan of work and a request for appropriatios) the prospects are that the term of its existence could be as much as half completed before it knew with finality the scope of resources available for making its studies. Under such circumstances the work schedule would have to be geared to a succession of appropriation actions and-some of which might be delayed-it would seem highly probable that an extension beyond the two-year period would then be necessary.

It is for these reasons that we favor the appropriation now of the 2.5 million dollars as a single appropriation, to be available until expended, to cover the work of the Commission in spite of the fact that its life span extends over parts of three fiscal years. The report of the House Committee wisely notes that in the event "a limited extension of time beyond that prescribed in the bill is later justified, this can be provided by an amendment. . . ." It would be expected, in that event, that the Commission would likewise indicate what, if any, additional resource requirements were necessary and these could be considered in a subsequent appropriation if the Congress agreed to extend the Commission's life.

Sincerely,

DWIGHT A. INK, Assistant Director for Executive Management.

ATTACHMENT 1. ACTUAL COSTS INCURRED BY 1ST AND 2D HOOVER COMMISSIONS

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ATTACHMENT 3. LIST OF SUBJECT HEADINGS UNDER WHICH HOUSE COMMITTEE DISCUSSES PROBLEMS TO BE CONSIDERED BY COMMISSION ON GOVERNMENT PROCUREMENT

1. Modernizing procurement statutes (p. 15).

2. Simplifying the regulations (p. 16).

3. Training of procurement personnel (p. 16).

4. Procurement organization (p. 17).

5. Promoting more competition (p. 18).

6. Incentive contracting (p. 18).

7. Total package procurement (p. 19).

8. Source selection and performance evaluation (p. 20).

9. Government work in-house or by contract (p. 20).

10. Government-furnished property (p. 21).

11. Truth in negotiations (p. 22).

12. Cost estimation (p. 23).

13. Profits and risks (p. 23).

14. Reduction of paperwork (p. 24).

15. Small business (p. 25).

16. Procurement against poverty (p. 26).

17. Fair employment and public contracting (p. 26).

18. Labor standards on public contracts (p. 27).

19. Patents and proprietary data (p. 28).

20. Conflicts of interest (p. 29).

21. Contract appeal board structure (p. 30).

22. Resolution of contract disputes (p. 31).

23. Role of the contract auditor (p. 32).

24. Architect-engineer services (p. 32).

25. Rights of the subcontractor (p. 33).

26. Financial risks of catastrophic accidents (p. 34). 27. Contracts vs. grants (p. 35).

NATIONAL COMMISSION ON CONSUMER FINANCE

STATEMENT OF MAURICE MANN, ASSISTANT DIRECTOR, BUREAU OF THE BUDGET

ACCOMPANIED BY:

ROGER ADKINS, ASSISTANT DIRECTOR, ECONOMIC, SCIENCE,
AND TECHNOLOGY PROGRAMS DIVISION

A. J. CRATEN, BUDGET OFFICER, GSA

INTRODUCTION OF ASSOCIATES

Senator HRUSKA. The next presentation will be made on behalf of the Commission for Consumer Finance.

Will you please give us the names of your associates here as well as your own name and official position so that we may have it properly recorded.

Mr. MANN. Yes, sir. My name is Maurice Mann, Assistant Director, Bureau of the Budget.

I have with me Mr. Roger Adkins on my left, who is Assistant Director from our Economic, Science, and Technology Programs Division, and on his right Mr. A. J. Craten, who is a Budget Officer at GSA.

The Consumer Credit Protection Act of May 29, 1968, established the National Commission on Consumer Finance.

I am summarizing the statement. You have the full statement. Nothing much has done about this Commission following its inclusion in the act. Recently, President Nixon in conjunction with his consumer message last October, activated the Commission and requested a supplemental appropriation of $375,000 for 1970, to finance its activities. The President has named three members of the Commission, including the Chairman. There are three public members, three from the House and three from the Senate. The three public members are the Chairman, Prof. Robert Braucher, a professor of Law at Harvard University; Prof. Robert Johnson from Purdue University; and Mr. Ira Millstein, an attorney from New York City.

The three Senate members are Senators Sparkman, Proxmire, and Tower.

The three members from the House are Congressman Halpern, Mrs. Sullivan, and Mrs. Dwyer.

I guess there is no quarrel that this is an area that needs an awful lot of study. Many things are going on in this area that we don't know much about, and I think you will find most of the budget items self-explanatory.

In that regard insofar as the budget is concerned, Mr. Craten from the GSA will appear to discuss the details of it with you. I think that that pretty well summarizes my statement.

Senator HRUSKA. Have any appointments to these Commission positions been made before?

Mr. MANN. As I understand it, sir, President Johnson immediately prior to leaving office, did appoint three members. President Nixon asked them to resign and has subsequently appointed three more. Senator HRUSKA. This is a new panel then?

Mr. MANN. Yes, sir.

Senator HRUSKA. Have all three of President Johnson's appointees resigned?

Mr. MANN. To the best of my knowledge.

Mr. ADKINS. Yes, sir. There was a controversy as to whether one member, Mr. O'Connell from Maryland, resigned. He agreed as I understand it.

GOALS OF THE COMMISSION

Senator HRUSKA. For the record, what will the Commission specifically try to accomplish?

Mr. MANN. As you know, Senator, there are a number of questions: First, if you look at the area of consumer spending in general it is very, very large, and the current relative number of dollars that the consumers are spending accounts for about two-thirds of our economy, roughly $600 billion. Within this total roughly $120 billion represents total consumer credit.

So in effect we have one-fifth of total consumer spending accounted for by credit. There are many things going on in this area to which the act itself is directed. Consequently, I think the Commission will be looking at some ground rules, evaluating if you will the consumer finance industry.

Whether our financial institutions are adequate to supply the consumer credit at reasonable terms and reasonable amounts, and perhaps from my own standpoint take a look at some of these areas of ignorance, lack of knowledge, inaccessability, particularly in cases where people are not familiar with what is available. Hopefully, it will take a look at present regulations to see if they are sufficient to protect consumers from unscrupulous credit practices.

Senator HRUSKA. Credit regulations?

Mr. MANN. Consumer credit. Our existing institutions are adequate. Do we need more? Do we need more regulatory activity on behalf of the consumer by Federal Trade Commission? Should the Commission be given more authority? I think we raise some interesting questions. We may find that we have enough.

Senator HRUSKA. Has this commission been in existence since May 1968?

Mr. MANN. No, sir; the authority to appoint the commission existed, but President Johnson did not make the appointments until, as I understand it, within the hour before the end of January 20, or something like that.

COMMISSION PERSONNEL

Senator HRUSKA. Since the appointment of the members, has any staff personnel been attached to the commission?

Mr. MANN. No, sir.

Senator HRUSKA. It has no personnel, no employees?

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