AMENDMENT OF DEFENSE PRODUCTION ACT OF 1950 --CONFERENCE REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72-00337R000300140012-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 12, 2016
• Document Release Date: October 5, 2001
• Sequence Number: 12
• Publication Date: August 12, 1970
• Content Type: OPEN

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Approved For Release 2001/11/01: CIA-RDP72-00337R000300140012-8
. August 12, 1970 CONGRESSIONAL RECORD ? Si.INA'11 S 13317
try, and our world. Surely a war on II- The requirement for congressional no- performance should be performed by an
legal drugs is a war worth fighting. =cation would not, however, apply to independent body. By placing this au-
Mr. BYRD of West Virginia. Mr. Pres- modifications of standards or regulations thority in the board, to be approved by
ident, I suggest the absence of a quorum. already promulgated. the Senate, I think we would have guar-
The PRESIDING OFFICER. The clerk The Senate bill also contained a provi- amteed that independence. The provision
will call the roll. sion limiting the loan guarantee author- in the pending bill, in my opinion, fails
The assistant legislative clerk pro- ity under the Defense Production Act to because the independence of its Members
ceeded to call the roll. $20 million and preventing any guaran- will have already been compromised
Mr. BYRD of West Virginia. Mr. Pres- tees from being used primarily for the by their very appointment. While the
ident, I ask unanimous consent that the purpose of preventing the insolvency or Comptroller General of the United
order for the quorum call be rescinded, bankruptcy of a firm unless the President States remains chairman under both
The PRESIDING OFFICER. Without certified defense production would be di- approaches, under the approach aP-
objection, it is so ordered. rectly and substantially affected. The proved in the bill he himself will appoint
House Conferees agreed to accept the the members of the board and, therefore,
ORDER FOR RECOGNITION OF SEN- Senate language, they are subject to his pressure.
Finally, Mr. President, the House bill The Comptroller General of the United
ATOR GOODELL TOMORROW contained a provision giving the Presi- States, Mr. Elmer Stags, in testimony
Mr. BYRD of West Virginia. Mr. Pres- dent standby authority to control wages, before the Senate Banking and Currency
ident, I ask unanimous consent that at salaries, prices and rents. This authority Committee, opposed the provision which
the conclusion of the vote tomorrow on would expire on February 28, 1971. This the bill finally contained. He argued that
the amendment offered by the able Sena- provision was agreed to by the Senate members of the board should have been
tor from Wisconsin (Mr. PROXMIRE) ? conferees. independently appointed by the Presi-
Vich is presently scheduled for 12 Mr. President, I move the adoption of dent to represent the accounting pro-
d' loc noon, I believe?the able Senator the conference report. fession, small business, as well as indus-
in e York (Mr. GOODELL) be reco,g- Mr. BENNETT. Mr. President, al- try and government. But, by rejecting
r not to exceed 20 minutes. though I was a conferee on the bill, I the position taken by the President, the
The PRESIDING OFFICER. Without was unable to attend the conference; but Comptroller General?and, incidentally,
'osV? j ectiontit is so ordered. had I been there, I would not have signed by himself?the bill has now set up a
?the report. board which has no real independence.
AMENDMENT
Title II, which was in the House bill, Mr. President, I realize that under
AMENDMENT OF DEFENSE PRODUC- to which the chairman referred last, the circumstances, these comments and
TION ACT OF 1950?CONFERENCE .gives the President the power to impose criticisms of mine are more or less
REPORT wage and price controls for a period of meaninglesss because we have gone too
Mr. SPARKMAN. Mr. President, I sub- 6 months. That reminds me of giving a far down the legislative path to change
mit a report of the committee of confer- fireman authority to use a water sup- that path.
ence on the disagreeing votes of the two ply for only 30 minutes in case of a Mr. SPARKMAN. Mr. President, will
Houses on the amendments of the House three-alarm fire. To me, that provision is the Senator from Utah yield?
to the bill (S. 3302) to amend the De- entirely political, and it is interesting Mr. BENNETT. I yield.
fense Production Act of 1950, and for that it will expire as soon as the 1970 Mr. SPARKMAN. With reference to
other purposes. I ask unanimous consent elections are over, setting up the board, of course, the Sen-
f or the present consideration of the re- The President has made it perfectly ator will remember that we discussed it
port, clear that he does not believe that the use at length in the committee. I had some
The PRESIDING OFFICER (Mr. of price, wage, and rent controls is the sympathy with his viewpoint, but the
SenwEncEn). Is there objection to the way to solve the inflation problem which Senator will recall that the Comptroller
present consideration of the report? he inherited. He has made it perfectly General particularly requested this kind
There being no objection, the Senate clear that he does not intend to use this of setup.
proceeded to consider the report, power which the bill forces on him. So But, so far as the conference itself was
(For conference report, see House pro- it is obvious to me, at least, that the concerned, I do not recall that we had
ceedings of August 10, 1970, pp. H8045-- purpose of writing this into the law is any choice, because the House had set
H8046, CONGRESSIONAL RECORD.) so that the President's political oppo- up practically the same language. About
Mr. SPARKMAN. Mr. President, a con- nents can say, "We gave you the power; the only change that was made in the
ference committee between the House inflation is not solved; therefore, you are conference was that they had, I believe,
and Senate met on Thursday, August 6 to responsible for the inflation." a provision in there that one of the ac-
resolv the differences between the House I am certain that the President has counting members had to be a man who
and Senate versions of S. 3302. courage enough to survive that kind of had experience in small business. We
The Senate version of S. 3302 author- attack, but I am disturbed that we would accepted that. That is about the only
ized the establishment of uniform cost write what to me is a completely political difference that prevailed between the
accounting standards to be applied
feature into a bill so far removed, whose two Houses so far as setting up the board
to all
defense contracts in excess of $100.000, purpose is to extend the defense produc- was concerned.
The standards would be developed by ation act. Mr. BENNETT. I recognize that this
' Also, I am one of those who have not is a kind of expression of frustration on
five-man Accounting Principles Board
headed by the Comptroller General, agreed with the method contained in the my part, but I cannot let the conference
The House bill established a similar Acbill to set up the accounting standards report be approved without expressing
-')
t board. I think it is a serious mistake, a my disappointment in these two lea-
counting Principles Board; however, the compromise of sound constitutional tures; namely, the feature with respect
accounting standards could not have been government and the separation of to which we picked up from the House
powers,
put into effect unless Congress enacted setting up the 6-month system, under
subsequent legislation.
'When this matter was before the Sen- _ which the President may impose wage
The conference committee agreed th ate Committee on Banking and Cur- and price controls which, I think, is for
accept the Senate version with two rency, I offered an amendment which the purpose of embarrassing him politi-
amendments. The first amendment re- would have set up a cost accounting cally; and then the feature?
quired that one of the accounting mem- board consisting of the Comptroller Gen- Mr. SPARKMAN. Will the Senator
bers of the Board have a background in eral and four members to be appointed by from Utah yield there further?
the accounting problems of small busi- the President, subject to the advice and Mr. BENNETT. I yield.
ness firms. The second amendment re- consent of the Senate. Mr. SPARKMAN. So far as the Sen-
quires that Congress be notified in ad- My amendment was defeated in the ate is concerned, I think that I can say
vance of all standards and regulations committee by a tie vote and come- we did not feel it was a political matter.
knullittlguled by the -Boara and be given quently, when it was offered in the Sen- I think the Senator has heard me say
a 60-day opporttlitUrthhoesoiolact tuarrrffeetiOn tlel
standards or reg MIMS.
t.ettpluypy 24gwa 7 mongol nova, d we would never
have to have wage and price controls. It
resolution of both Houses orCongress. I think that a review of contract cost is unsatisfactory from the standpoint of
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CONGRESSIA,),N S.ILN E Augus6 1,2,, hini
setting it up, and also unsatisfactory
from the standpoint of ? administering
the program.
I therefore certainly hope that the
President will not have to set up wage
and price controls. I hope that inflation
will start a downward turn so that we
can get out of that problem. But that
was the situation, and it was a practical
situation that we were met with. We did
not consider that in the Senate at all.
?
Mr. BENNETT. No.
Mr. SPARKMAN. We did not consider
it at all. We did pass, a couple of years
ago, a provision that gave the President
the option to use credit controls, either
voluntarily or mandatorily. The Senator
will remember that. But we were faced
with a realistic situation. The rollcall in
the House, which appears on page H7547
of the CONGRESSIONAL RECORD Of July 31,
1970, shows that the vote was 257 for it
and only 19 against.
Only 19 Representatives voted against
It. About a dozen of those 19 were Re-
publicans, but nearly all the other Re-
publicans joined in. I have forgotten
what the total was, but the Republican
leader over there voted for it, and the
assistant leader over there voted for
it?practically every one of the Repub-
licans.
? Several of the 19 were Democrats. As
I say, the majority leader and the assist-
ant majority leader voted for it. So, who
were we to question this being a political'
matter?
Mr. PROXMIRE. If the Senator will
yield on that point, I should like to point
out, furthermore, that of the three Re-
publicans in the conference committee,
two of them voted for the price-wage
controls in the House vote, including the
distinguished ranking member of the
House Banking Committee, Representa-
tive WIDNALL and Congressman MIZE, so
that we were in a position in that con-
ference where the House was overwhelm-
ingly united on this particular position.
Mr. BENNETT. That still does not pre-
vent me from claiming the privilege of
expressing my disappointment in the re-
sults of the conference.
I have talked at some length about this
problem at other times. I have talked
about it before the committee. I was try-
ing to manage a business during World
War II and part of the Korean war, try-
ing to wrestle from that point of view
with the wage,and price control problem.
I discovered, and the record will bear
me out, that wage and price controls do
not control inflation; 'that there are so
many ways to get around it, and that the
rate of inflation during World War II,
when those controls were in effect, was
at exactly the same rate 5 years after
the controls had been lifted. Thus, it is
a delusion and a snare.
Well, Mr. President, I have had the
opportunity to express my disappoint-
ment. I shall have nothing more to say
about the report except to say that I
should like to be recorded as opposing it.
their leadership on the extension of the
Defense Production Act and the provi-
sion dealing with uniform cost account-
ing standards. I was most gratified that
the House-Senate conference committee
agreed to adopt substantially the Senate
provisions concerning uniform cost ac-
counting standards.
The bill passed by the Senate by an
overwhelming vote of 69 to 1 would have
required the adoption of uniform cost
accounting standards on all Government
contracts in excess of $100,000. These
standards would have been promulgated
by a five-man accounting board ap-
pointed by the Comptroller General who
would serve as its chairman.
While the House bill established a
similar accounting board, the regulations
could not have been put into effect unless
Congress enacted subsequent legislation.
In my view, this provision would have
completely negated the intent of the
Comptroller General's report which con-
cluded that uniform cost accounting
standards on Government contracts were
both feasible and desirable. In view of
the billions of dollars a year being wasted
by the Defense Department, it is time we
put these standards into effect without
further delay.
In that connection, the bill agreed to
by the House-Senate conference com-
mittee authorizes the accounting prin-
ciples board to promulgate regulations
without the need for coming back to Con-
gress for additional legislation. The bill
also requires the board to report to Con-
gress within 2 years concerning their
progress in promulgating cost account-
ing standards. In view of the urgent need
to put these standards into effect as soon
as possible, I would hope that the bulk
of these regulations would be completed
and issued within the 2-year period.
No doubt, these regulations can be sub-
sequently refined, modified and amended
on a continuing basis; however, it seems
entirely reasonable to assume that the
major task of the accounting board can
be completed within the initial 2-year
period.
Mr. President, again I wish to thank
the distinguished chairman of our com-
mittee and the able chairman of the Sub-
committee on Production and Stabiliza-
tion for their excellent cooperation and
assistance in getting this long overdue
reform enacted into law.
Mr. TOWER. Mr. President, I must
express my objections to the uniform
cost accounting bill which we are voting
on today. This measure has been char-
acterized as totally impractical as a
matter of accounting science because of
the diversity of products, firms, and cost
factors involved in defense contracting.
I am not opposed to tightening up the
procedures by which the Defense De-
partment and the General Accounting
Office assess the effectiveness of the ex-
penditure of our tax dollars for defense
procurement. But to require the General
Accounting Office and the Accounting
cases the GAO can determine costs
adequately from their knowledge of the
accounting practices of various types of
contractors and product lines. To cause
all of these contractors to change over
their accounting systems to some "uni-
form" system would be tremendously ex-
pensive, and would cost the firms more
than the system could save, therefore re-
sulting in higher prices for defense
products.
Of the two versions of this bill, the
House bill was much preferable because
it gave Congress a chance to assess what-
ever standards are arrived at by the
Board, and to determine whether they
were too detailed to be feasible to im-
plement. The Senate version, which was
adopted in conference, does not give
Congress the chance to review these
standards. I think this is a mistake.
I intend to watch the developments
that arise from this legislation closely
in the coming months, and I hope that
Congress will reconsider the wisdom of
this measure at the beginning of the
next Congress.
The PRESIDING OFFICER,. The
question is on agreeing to the conference
report.
Mr. BYRD of West Virginia. Mr. Pres-
ident, I suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to call
the roll.
Mr. BYRD of West Virginia. Mr. Pres-
ident, I ask unanimous consent that the
order for the quorum call be rescinded.
The PRESIDING Or.FICER. Without
objection, it is so ordered.
The question is on the adoption of the
conference report.
The report was agreed to.
Mr. SPARKMAN. Mr. President, I
move that the Senate reconsider the
vote by which the conference report was
agreed to.
Mr. BYRD of West Virginia. Mr. Pres-
ident, I move to lay that motion on the
table.
Mr. TALMADGE. Mr. President, I
move to lay the motion on the table.
The motion to lay on the table was
agreed to.
AUTHORIZATION OF APPROPRI-
ATIONS FOR MILITARY PRO-
CUREMENT AND OTHER PUR-
POSES
The Senate resumed the consideration
of the bill (H.R. 17123) to authorize ap-
propriations during the fiscal year 1971
for procurement of aircraft, missiles,
naval vessels, and tracked combat ve-
hicles, and other weapons, and research,
development, test, and evaluation for the
Armed Forces, and to prescribe the au-
thorized personnel strength of the Se-
lected Reserve of each Reserve compo-
nent of the Armed Forces, and for other
purposes.
TUE C-5A
Mr. PROXMIRE. Mr. President, I Board created in this bill to work out Mr. TALMADGE. Mr. President, the
want to commend the fine work of the uniform standards for all defense con- distinguished senior Senator from Michi-
chairman of the Senate Banking Com- tractors seems to be entirely impractical. gan was kind enough to send to my office
mittee, Senatoih naravangtoige giumte ett?gosir;
a g agok to o ent which he proposes to of-
man of its Su6 Ipi4tPtary procurement act
S.
.1 It
! 4
and Stabilization, Senator MONDALE for flee testified that in 99 percent of the which relates to the C-54. A preliminary
menu ofsuntygstfmr.,.13Alee
tion0?to realize the ideals of liberty, equal-
ity end justice.
The "non-system" is near a breakdown at
rf some points in government, he said, since it
operates under cumbersome, outmoded, over-
lapping procedures.
A pillar of New Federalism is revenue-
sharing. Richardson pointed out that local-
ities face diminishing sources of tax reve-
nues, while Uncle Sam has prospects Of in-
creasing collections: This dollar mismatch
would be corrected under the Nixon plan of
sharing Federal wealth with local govern-
ment. It would, Richardson declared, be a
means of decentralizing government, moving
the administrative authority closer to the
areas in which problems exist.
Richardson said the present grant system
Is paralyzing government. Red tape requires
hours of bookwork by grant applicants and
a vast Federal establishment for processing.
?The solution, he stated, is not in retreat, but
in reform.
The Administration, he declared, is mov-
ing on these four fronts to straighten out
the labyrinthian maze that has frustrated
the functioning of many Federal programs
now in existence:
Grant consolidation?The President has
sought authority to consolidate existing
giant-in-aid categories. Richardson noted
that there are five library grant programs,
seven medical library grant programs. There
are nine vocational educational formula
grant programs and six project grant ,au-
thorizations.
Fund transfers?This plan would allow
Governors to transfer up to 20 percent of
Federal grant funds from any one program
to another of higher priority. Thus, funds
could be directed to high-priority programs,
instead of being spent where there is little
need.
Grant streamlining?Getting a Federal
grant is a laborious process now. Processing
'involves 28 steps, with up to 60 actions re-
quired under each step.
The Administration already has cut out
807 man-years by eliminating some of these
steps, Some 182 of the 516 steps Were cut
out of 23 projects in a special HEW pilot
study.
Decentralization?The Administration has
moved decisively in its effort to bring the
Government back to the people, Richardson
said. Regional officers are given more au-
thority. The various domestic agencies now
have the same regional boundaries with
headquarters in the same cities, slashing
travel time required.
State and local leadership will be upgraded
under the New Federalism, Richardson said.
FISCAL RESPONSIBILITY ACT OF
1970
(Mr. BOW asked and was given per-
mission to extend his remarks at this
point in the Record and to include ex-
traneous matter.)
Mr, BOW. Mr. Speaker, today a ma-
jority of the Republican members of the
Appropriations Committee and the
Republican leadership are joining to-
gether to introduce the "Fiscal Respon-
sibility Act of 1970." This act would
establish a new limitation on spending
for fiscal year 1971 that will enable Con-
gress to control the results of its own ac-
tions on individual appropriation bills.
For the benefit of the Members I in-
clude the following statement explaining
the various sections of the bill:
STATEMENT
Section 1 of the bill would establish a
limitation of $209,000,4190,000_ expendi- (Mr. MORSE asked and was given Mr. PATMAN submit ed the following
tures andAtap ratv wowease) 2o0 inztiosknOwv4i4Emb17-ttfrOrktidnocffitErtillforeport and statement on the
2001/11/01,:CIA-RDP72-003371R0003001400138
been established in several recent fiscal years.
Thefigure of $205,600,000,000 is the re- [Mr. MORSE'S remarks will appear
vised estimate of budget outlays for fiscal hereafter in the Extensions of Remarks.]
1971 which was made by the President in his
statement of May 19, 1970. It reflects in-
creases, over the original February Budget
estimate ($200,800,000,000), of $2.3 billion in
uncontrollable programs and $2.5 billion in
other programs.
Section 2 of the bill would provide for in-
creasing the limitation by the amount of
increases, over the May 19 estimate, in cer-
tain designated uncontrollable programs,
such as Social Security benefits, interest,
veterans' benefits, and farm price supports.
Similar provisions for adjustments in limita-
tions on outlays have been contained in com-
parable legislation enacted in several recent
fiscal years.
Section 3 of the bill would provide for fur-
ther adjustments in the limitation on out-
lays in the event of a shortfall of estimated
receipts from the sale or lease of certain
Government assets, such as mortgaged prop-
erties held by the Department of Housing
and Urban Development and the Veterans
Administration and leases of lands on the
Outer Continental Shelf. Similar provisions
for adjustments have been contained in other
comparable legislation establishing limita-
tions on outlays.
Section 4 of the bill is intended to prevent
the limitation on outlays, as adjusted for in-
creases in uncontrollable items and shortfalls
in estimated receipts, from being exceeded
because of action by the Congress which
would increase expenditures above the Pres-
ident's estimates. This section would require
the Director of the Office of Management and
Budget, at the close of the current session of
Congress, to report to the President and to
the Congress his estimate of the effect of
Congressional action on expenditures recom-
mended by the President. If the Director's
estimate indicated that expenditures would
exceed the adjusted limitation, the Director
'would be required to specify the pro rata
reduction in expenditures, for each activity
Increased by the Congress, which would be
necessary to bring total budget outlays
within the adjusted limitation. Agencies
would be required to manage their programs
so that outlays would not exceed the reduced
figures specified by the Director. There are
, no exceptions.
Section 4 thus provides a method by which
Congress would control the results of its own
actions on individual appropriation bills.
This is in marked contrast to bills establish-
ing outlays in previous years because such
bills generally have established a limitation
which was increased when Congress increased
appropriations for individual activities be-
yond the President's estimates,
Section 5 of the draft bill relates to the
method of distributing funds for activities
which involve the application of a formula
to the amount appropriated. As in the case
of some of the previous statutes establishing
limitations, this section would provide that
the reduced amount available for any par-
ticular activity?in accordance with the de-
termination made by the Director of the
Office of Management and Budget?be sub-
stituted for the amount appropriated when
applying the formula. This section also pro-
vides that the Government shall not be liable
for any difference between the amount ap-
propriated and the amount as reduced to
comply with the limitation.
Section 6 would repeal Title V of the Sec-
ond Supplemental Appropriations Act, 1970.
That title establishes a limitation on outlays
which would be increased whenever appro-
priations by the Congress might be in ex-
cess of the President's recommendations.
Limitations of the eanie general nature lave traneous ma ter.)
LEGISLATIVE REORGANIZATION
ACT OF 1970
(Mr. SCHWE1VGEL asked and was
given permission to extend his remarks
at this point in the RECORD and to include
extraneous matter.)
Mr. SCHWENGEL, Mr, Speaker, I
would like to paraphrase the lyrics from
the musical play "1776" to indicate my
feelings on the subject of congressional
reform in 1970:
On this humid Monday morning in this
congressional incubator,
We're waiting for the chirp, chirp, chirp,
of Congress being reformed.
We're waiting for the scratch, scratch,
scratch, of that tiny fellow being
born,
God knows it's hot enough to hatch a
stone, but will it hatch an egg, the
egg of congressional reform?
Dear God!
For four solid weeks we've been sitting
here.
Four weeks! Doing very little on reform!
I do believe .you've laid a curse on
North America
A curse that we once rehearsed in Phila-
delphia.
A second flood, a simple famine, plagues
of locusts everywhere
Or a cataclysmic earthquake I'd accept
with some despair.
But no! You send us Congress! -
Good God, Sir was that fair?
I say this with humility in Washington
We're your responsibility in Washington
If you don't want to see us hanging from
some far-off voting booth,
If you don't want the voice of independ-
ency to be forever stilled
Then God Sir?get Thee with it!!
For Congress never will.
You see, we piddle, twiddle, and resolve,
not one damn thing do we solve
or evolves that changes things
Piddle, twiddle, and resolve?nothing's
ever solved.
In foul, feated, fuming, foggy, filthy,
Washington.
Good God!
We may sit here for years and years
in Washington.
These indecisive grenadiers of Washing-
ton.
They can't agree on what is right and
wrong or what is good or bad.
I'm convinced the only purpose this
Congress ever had
Was to gather here specifically to drive
Fred Schwengel mad! I
You see, we piddle, twiddle, and resolve,
not one damn thing do we solve
In foul, feated, fuming, foggy, filthy,
Washington.
Dear God!
Is anybody there?
Does anybody care?
AMENDMENT OF DEFE E PRODUC-
TION ACT OF 1950? ONFERENCE
REPORT
wArved For Release 0110A E I f- ID-00337I 300140012 -8
Augt 10,mWE4164ENI10N
brtrj3Avo fz i.o9
to amend the Defense Pro-
ci
CONFERENCE REPORT (H. REPT. 91-1386)
The committee of conference on the dis-
agreeing votes of the two Houses on the
amendment of the House to the bill (S. 3302)
to amend the Defense Production Act of 1950,
and for other purposes, having met, after
full and free conference, have agreed to rec-
ommend and do recommend to their respec-
tive Houses as follows:
That the Senate recede from its disagree-
ment to the amendment of the House and
agree to the same with an amendment as
follows: In lieu of the matter proposed to
be inserted by the House amendment insert
the following:
TITLE I?DEFENSE PRODUCTION ACT
AMENDMENTS
? 101. Extension of Act
The first sentence of section 717(a) of the
Defense Production Act of 1950 (50 U.S.C.
App. 2166 (a) ) is amended?
(1) by striking out "August 15, 1970" and
inserting in lieu thereof "June 30, 1972"; and
(2) by striking out "section 714" and in-
serting in lieu thereof "sections 714 and 719".
? 102. Definitions
Section 702 of the Defense Production Act
of 1950 (50 U.S.C. App. 2152) is amended?
(1) by inserting "space," after "stockpil-
ing," in subsection (d) ; and
(2) by adding at the end thereof a new
Subsection as follows:
"(f) The term `defense contractor' means
any person who enters into a contract with
the United States for the production of ma-
terial or the performance of services for the
national defense."
1 103. Uniform cost accounting standards
Title VII of the Defense Production Act
of 1950.1$ amended by adding at the end
thereof a new section as follows.
"COST -ACCOUNTING STANDARDS BOARD
P
?
"SEc. 719. (a) There is established, as an
agent of the Congress, a Cost-Accounting
Standards Board which shall be independent
of the executive departments and shall con-
sist of the Comptroller General of the United
States who shall serve as chairman of the
Hoard and four members to be appointed by
the Comptroller General. Of the members
appointed to the Board, two, of whom one
shall be particularly knowledgeable about
the cost accounting problems of small busi-
ness, shall be from the accounting profes-
sion, one shall be representative of indus-
try, and one shall be from a department or
agency of the Federal Government who shall
be appointed with the consent of the head
of the department or agency concerned. The
term of office of each of the appointed mem-
bers of the Board shall be four years, ex-
cept that any member appointed to fill a
vacancy in the Board shall serve for the re-
mainder of the term for which his predeces-
sor was appointed. Each member of the
Board appointed from private life shall re-
ceive compensation at the rate of one two-
hundred-sixtieth Of the rate prescribed for
level IV of the Federal Executive Salary
Schedule for each day (including traveltime)
in which he is engaged in the actual per-
formance of duties vested in the Hoard.
"(b) The Board shall have the power to
appoint, fix the compensation of, and re-
it
move an exepUtlye pOcK9tar :and two addi-
tional staff members Eit44.1.1 regard to Chap-
ter 51, subchapters rit and I of cVapfer 53,
and chapter 75 of 'title 5, United States Code,
and those provisions of such title relating to
appointment in the competitive service. The
executive secretary and the two additional
staff members may be paid compensation
at rates not to exceed, the rate's prescribed for
levels IV and V of the Federal :Executive
Salary Schedule, respectively.
"(c) The Board is authorized -be appoint
and fix the compensation of such other
personnel as the Board deems necessary to
carry out its functions.
"(d) The Board may utilize personnel
from the Federal Government (with the con-
sent of the head of the agency concerned)
or appoint personnel from private life with-
out regard to chapter 51, subchapters III
and VI of chapter 53, and chapter 75 of title
5, United States Code, and those provisions
of such title relating to appointment in the
competitive service, to serve on advisory com-
mittees and task forces to assist the Board
in carrying out its functions and responsi-
bilities under this section.
"(e) Except as otherwise provided in sub-
section (a), members of the Board and of-
ficers or employees of other agencies of the
Federal Government utilized under this sec-
tion shall receive no compensation for their
services as such but shall continue to receive
the compensation of their regular positions.
Appointees under subsection (d) from pri-
vate life shall receive compensation at rates
fixed by the Board, not to exceed one two-
hundred-sixtieth of the rate prescribed for
level V in the Federal Executive Salary
Schedule for each day (including traveltime)
in which they are engaged in the actual Per-
formance of their duties as prescribed by the
Board. While serving away from their homes
or regular place of business. Board members
and other appointees serving on an inter-
mittent basis under this section shall be
allowed travel expenses in accordance with
section 5703 of title 5, United States Code.
"(f) All departments and agencies of the
Government are authorized to cooperate with
the Board and to furnish information, appro-
priate personnel with or without reimburse-
ment, and such financial and other assist-
ance as may be agreed to between the Board
and the department or agency concerned.
"(g) The Board shall from time to time
promulgate cost-accounting standards de-
signed to achieve uniformity and consistency
in the cost-accounting principles followed
by defense contractors and subcontractors
under Federal contracts. Such promulgated
standards shall be used by all relevant Fed-
eral agencies and by defense contractors and
subcontractors in estimating, accumulating,
and reporting costs in connection with the
pricing, administration and settlement of all
negotiated prime contract and subcontract
national defense procurements with the
United States in excess of $100,000, other
than contracts or subcontracts where the
price negotiated is based on (1) established
catalog or market prices of commercial items
sold in substantial quantities to the general
public, or (2) prices set by law or regulation.
In promulgating such standards the Board
shall take into account the probable costs
of implementation compared to the probable
benefits.
"(h) (1) The Board is authorized to make,
promulgate, amend, and rescind rules and
regulations for the implementation of cost-
accounting standards promulgated under
subsection (g). Such regulations shall re-
quire defense contractors and subcontrac-
tors as a condition of contracting to dis-
close in writing their cost-accounting prin-
ciples, including methods of distinguishing
direct costs from indirect costs and the
basis used for allocating indirect costs, and
to agree to a contract price adjustment, with
interest, for any increased costs paid to the
defense contractor by the United States be-
cause of the defense contractor's failure to
comply with duly promulgated cost-account-
ing standards or to follow consistently his
disclosed cost-accounting practices in pricing
contract proposals and in accumulating and
reporting contract performance cost data.
Such interest shall not exceed 7 per centum
per annum measured from the time such
payments were made to the contractor or
H 8045
subcontractor to the time such price adjust-
ment is effected. If the parties fail to agree
as to whether the defense contractor 02 sub-
contractor has complied with cost-account-
ing standards, the rules and regulations re-
lating thereto, and cost adjustments de-
manded by the United States, such disagree-
ment will constitute a dispute under the
contract dispute clause.
0(2) The, Board is authorized, as soon as
practicable after the date of enactment of
this section, to prescribe rules and regula-
tions exempting from the requirements of
this section such classes or categories of de-
fense contractors or subcontractors under
contracts negotiated in connection with na-
tional defense procurements as it determines,
on the basis of the size of the contracts in-
volved or otherwise, are appropriate and con-
sistent with the purposes sought to be
achieved by this section.
"(3) Cost-accounting standards promul-
gated under subsection (g) and rules and
regulations prescribed under this subsection
shall take effect not earlier than the ex-
piration of the first period of sixty calendar
days of continuous session of the Oongress
following the date on which a copy of the
proposed standards, rules, or regulations is
transmitted to the Congress; if, between the
date of transmittal and the expiration of such
sixty-day period, there is not passed by the
two Houses a concurrent resolution stating
in substance that the Congress does not
favor the proposed standards, rules, or regu-
lations. For the purposes of this subpara-
graph, in the computation of the sixty-day
period there shall be excluded the days on
which either House is not in session because
of adjournment of more than three days to
a day certain or an adjournment of the
Congress sine die. The provisions of this
paragraph do not apply to modifications of
oast accounting standards, rules, or regula-
tions which have become effective in con-
formity with those provisions.
"(i) (A) Prior to the promulgation under
this section of rules, regulations, cost-ac-
counting standards, and modifications there-
of, notice of the action proposed to be taken,
including a description of the terms and
substance thereof, shall be published in the
Federal Register. All parties affected there-
by shall be afforded a period of hot less than
thirty days after such publication in which
to submit their views and comments with
respect to the action proposed to be taken.
After full consideration of the views and
comments so submitted the Board may
promulgate rules, regulations, cost-account-
ing standards, and modifications there of
which shall have the full force and effect of
law and shall become effective not later than
the start of the second fiscal quarter be-
ginning after the expiration of not less than
thirty days after publication in the Federal
Register.
"(B) The functions exercised under this
section are excluded from the operation of
sections 551, 553-559, and 701-706 of title 5,
United States Code.
"(C) The provisions of paragraph (A) of
this subsection shall not be applicable to
rules and regulations prescribed by the Board
pursuant to subsection (h) (2).
"(j) For the purpose of determining
whether a defense contractor or subcontrac-
tor has complied with duly promulgated cost-
accounting standards and has followed con-
sistently his disclosed cost-accounting prac-
tices, any authorized representative of the
head of the agency concerned, of the Board,
or of the Comptroller General of the United
States shall have the right to examine and
make copies of any documents, papers, or
records of such contractor or subcontractor
relating to compliance with such cost-ac-
counting standards and principles.
"(k) The Board shall report to the Con-
gress, not later than twenty-four months
after the date of enactment of this section,
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H 8046 CONGRESSIONAL RECORD -- HOUSE August 107-1970
by concurrent resolution block the proplei
standards from taking effect
However, minor and technical modifica-
tions in already promulgated standards, rules
or regulations which do not In effect con-
stitute the issuance of new standards, rules
or regulations would not have to be sub-
mitted to Congress prior to promulgation.
The compromise version also contained
various administrative and enforcement pro-
visions concerning uniform accounting
standards contained in the Senate version
of S. 8302.
The House version of S. 3302 gave the
President standby authority to stabilize
prices, wages, salaries, rents and interest
rates at levels not less than those prevailing
on May 25, 1970, but adjustments could be
made to avoid inequities. This authority
would expire February 28, 1971. The Senate
conferees receded to the House on this en-
tire prevision except for the deletion of in-
terest rates from the standby controls title.
This amendment was aocepted by the House
conferees because the President was already
given standby authority to control interest
races under Public Law 91-151 passed by the
Congress in December, 1969.
The House version of S. 3302 did riot con-
tain any amendments affecting the Defense
Production Act loan guarantee program. The
Senate version limited these loan guarantees
to a maximum of $210 million per contractor,
except with Congressional approval. It also
prohibits the use of the Defense Production
Act loan guarantee program primarily to pre-
vent insolvency or bankruptcy unless the
President certifies In detail to Congress that
such a business failure -would have a direct
and substantially adverse effect upon defense
_ production and presentee/nil Se/Intent-on at
least ten days prior to such lean guarantee.
The House receded to the Senate version en
this prevision -beanie. otthe /Wet to prevent
unwarranted use of DSA loan guatrantatee
without adequate- nifelfunr4S? -
Weimar Paanne,
Lemma E. SULLIVAN,
HENRY S. REUSS,
THOMAS L. Asareme
Managers on the Part of the Ito us'.
concerning its progress in promulgatin cost-
accounting standards under subsection (g)
and rules and regulations under subeection
(he. Thereafter, the Board shall make an
annual report to the Congess with respect
to its activities and operations, tcgether
with such recommendations as it deems ap-
propriate.
"(I) There are authorized to be appro-
priated such sums as may be. necessary to
carry net the provisions of this section."
S lee. Loan guarantees
Section 301 of the Defense Production
Act of 1950 (50 U.S.C. App. 2091) is amended
by adding at the end thereof a new subsec-
tion as follows:
"(e) (I) Except with the approval of the
Congress, the maximum obligation of any
guaranteeing agency under any loan, dis-
count, advance, or commitment in connec-
tion therewith, entered into under this sec-
tion shell not exceed 320,000,000.
"(2) The authority conierred by this sec-
tion shall not be used primarily to prevent
the financial insolvency :or bankruptcy of
any person, unless
"(A) the President certifies that tee in-
solvency or bankruptcy would have a direct
and substantially adverse effect upcn de-
fense production; and
"(B) a copy of such certification, together
with a detailed ju.stincation thereof, is tram,-
mitteci to the Congress and to the Commit-
tees on Banking and Currency of Ise re-
spective Houses at least ten days prior to
the exercise of that authority for such use."
TITLE II---COST OP LIVING
STABILIZATION
201, Short title
This title may be cited as the "Ecc comic
Stabilization Act of 1970'.
202. Presidential authority :
The President is authorezed to issue such
orders end regulations as he may deem ap-
propriate to stabilize prices, .rents, wages,
and salaries at levels not less than these
prevailing on May 25, 1970. Such orders and
regulations may provide for the making of
such adjustments as my be necessery eo
prevent gross inequities.
S 208. Delegation
The President may delegate the perform-
ance of any function under this title to
such officers, departments, and agencies of
the United States as he may deem apprepri-
ate.
204.. Penalty
Whoever willfully violates any order or reg-
ulation under this title shall be emit not
more than 35.000.
205. Injunet i OHS
Whenever it appears to any agency of the
United States, authorized by the President
to exercise the authority contained I i this
section to enforce orders and regulations it-
sued un.der this title, that any person has en-
gaged, le engaged, or is about to engage in
any act:3 or practices constituting a viciatioa
of any regulation or order under this title, it
may in. As discretion bring an action, in the
proper district court of the United States or
the proper United States court of any terri-
tory or other place subject to the jurist iction
of the United States, to enjoin such acts or
practices, and upon a proper showing a per-
manent or temporary injunction or restrain-
ing order shall be granted without bond.
Upon application of the agency, any such
court may also issue mandatory injunctions
commanding any person tc comply with any
regulation or order under this title.
206. Expiration
The authority to issue anti enforce orders
and regulations under this title expires at
midnight February 28, 1971, but such ex-
piration than not affect any proceeding un-
der section 204 for a violation of ane such
order or regulation, or for the punishment
for contempt committed in the violation of
any injun otion issued under section 205, com-
mitted prior to March 1, 1971.
And the House agree to the same.
WRIGHT PATMAN,
LEONOR K. Sueervein
Heresy S. Eruss,
Tnomas L. ASILLEY,
Managers on the Part of the House.
JOHN SPARKMAN,
WILLIAM PROXMIRE,
EOM UND S. MOSKII ,
WALTER F. MONDALE,
ERNEST F. 11OLLINGS,
? CHARLES E. GOODELL,
Managers on the Part of the Senate.
STATEMENT
The managers on the part of the House at
'she conference on the disagreeing votes of
*she two Houses on the amendment of the
House to ehe bill (S. 3302) to amend the De-
:ream Production Act of 1950, and for other
purposes, submit the following statement in
eesplanation of the effect of the action agreed
upcn by ihe conferees and recommended In
the aceonmanying conference report:
GENERAL SUMMARY
The effect of the conference substitute
:na7 be summarized as follows:
The licuse conferees agreed to recede to
the Senate version concerning the provisions
dealing with uniform accounting standards
with two amendments.
The Senate conferees agreed to recede to
the House version as it relates to Title II on
standby wage, price, salary and renernne,
witb an amendriont.
The House conferees agreed te
'the-Senate version as It relates to 1
platted on the use of Defense ProdUet
aoan guarantees.
DETAILED E X PLAN AT EON
_
The House version of S. 3302 establiehed
f - rite mber Cost-Accounting *tender&
Board appointed and chaired by the Comp-
treater General, and made up of two mem-
bera of the accounting profession (one with
knowledge of small business accounting prac-
tices), one representative of industry and
one representative of a Government agency,
all serving four-year terms. The Board was
given the power to recommend to the Con-
gress by Tune 30, 1971. and each June 30
thereafter, cost accounting standards de-
sigr ed to achieve uniformity and consistency
for use by defense contractors and subcon-
tractors for negotiated contracts.
Tie version agreed to by the conferees
would establish the same five-man Cost-
Accounting Standards Board as created under
the House version and would include the
provision that one of the two professional
accountants on the Board must have knowl-
edge of sir all business accounting. The House
cionSerees agreed to the Senate version that
the Board would have the power to promul-
gate cost accounting standards designed to
achieve uniformity and consistency for use
by ielense contractors and subcontractors
for negotiated contraces, but these standards
would not be applied to:
) contracts of 8100,000 or less;
(2) negetiated contracts where prices are
established by catalog or market price of
commercial items sold in substantial quan-
tities to the general public;
(2) utility rates set by law or regulation;
(4) where the Board finds it is not neces-
sary to apply the standards to certain classes
of contractors because of the size of the con-
tracts or otherwise.
Ir addition, the House conferees insisted
that the Senate version be changed to require
that any proposed standards, rules or regula-
tion.s to be promulgated by the Board be
'transmitted to Congress for 60 days of contin-
llot13 session, during which Congress could
LEAVE OF ABSENCE
By unanimous consent, leave of ab-
sence was granted as follows:
To Mr. Frivsir (at the request of Mr.
Boons) for today, on account of official
business.
To Mr. RYAN (at the request, of Mr.
Kocn) for the week of August 10, on ac-
count of illness.
To Mr. O'HARA (at the request of Mr.
ALBERT) for August 10, 11, and 12, on ac-
count of illness.
To Mr. HAGAN (at the request: of Mr.
ALBERT) for August 10, On account of of-
ficial business.
To Mr. MCKNEALLY (at the request of
Mr. GERALD R. Pomo) for Auvust 10 and
11, on account of serious illness in family.
SPECIAL ORDERS GRANTED
By unanimous consent, permission to
address the House, following the legisla-
tive program and any special orders here-
tofore entered, was granted to:
Mr. FEIGHAN for 30 minutes? Tuesday,
August 11, to revise and extend his re-
marks and include extraneous material.
Mr. Marrow for 5 minutes, today, and
to revise and extend his remarks and
include extraneous matter.
(The following Members sat the re-
quest of Mr. SOMEHOW to revise and
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