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February 26, 1974
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Approved For Release 2000/08/27 : CIA-RDP75B00380RA 0130002-4 V511i, 93D CONGRESS 2d Session } e ~1 ,668 REPORT No. 93-692 OFFICE OF FEDERAL PROCUREMENT POLICY ACT OF 1973 REPORT COMMITTEE ON GOVERNMENT OPERATIONS UNITED STATES SENATE TO ACCOMPANY S. 2510 TO CREATE AN OFFICE OF FEDERAL PROCUREMENT POLICY WITHIN THE EXECUTIVE OFFICE OF THE PRESIDENT, AND FOR OTHER PURPOSES FEBRUARY 26, 1974.-Ordered to be printed U.S. GOVERNMENT PRINTING OFFICE 29-143 WASHINGTON : 1974 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 COMMITTEE ON GOVERNMENT OPERATIONS SAM J. ERVIN, JR.. North Carolina, Chairman JOHN L. McCL:E1,LAN, Arkansas CHARLES H. PERCY, Illinois HENRY M. JACKSON, Washington JACOB K. JAVITS, New York EDMUND S. MUSKIE, Maine EDWARD J. GURNEY, Florida ABRAHAM RIBICOFF, Connecticut WILLIAM V. ROTH, JR., Delaware LEE METCALF, Montana BILL BROCK, Tennessee JAMES B. ALLEN, Alabama LAWTON CHILES, Florida SAM NUNN, Georgia WALTER D. HUDDLESTON, Kentuc',iy ROBERT BLAND SMITH, Jr.. Chief Counsel and Staff Director ELI E. NOPLEMAI, Counsel W. P. =GOODWIN, Jr., Counsel JANET GAY IIOLLIDAY, Chief Clerk J. ROBERT VASTINE, Minority Counsel BRIAN CONBOY, Jlpeciel Counsel for the Minority W. THOMAS FOXwELI,, Staff Editor Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 CONTENTS Page Amendment------------------------------------------------------ 1 I. Summary of the act------------------------------------------ 8 H. Need for the legislation--------------------------------------- 10 III. Cost estimates---------------------------------------------- 12 IV. Legislative history------------------------------------------- 13 The Commission on Government Procurement--------------- 13 Basis of the Commission's Recommendations---------------- 14 The Need for Central Leadership-------------------------- 14 Procurement Commission Conclusions---------------------- 15 Bills Introduced: House of Representatives----------------------------- 16 Senate---------------------------------------------- 16 V. Section-by-section analysis of the bill--------------------------- 16 Section 1-Short Title------------------------------------ 16 Section 2-Declaration of Policy--------------------------- 16 Section 3-Findings and Purpose-------------------------- 17 Section 4-Definitions------------------------------------ 17 Section 5-Office of Federal Procurement Policy------------- 18 Section 6-Authority and Functions------------------------ 18 Section 7-Administrative Powers-------------------------- 21 Section 8-Responsiveness to Congress--------------------- 22 Section 9-Effect on Existing Laws------------------------ 24 Section 10-Effect on Existing Regulations------------------ 24 Section 11-Authorization of Appropriations---------------- 24 Section 12-Delegation----------------------------------- 25, Section 13-Annual Pay------------------ ..--------------- 25 Section 14-Access to Information------------------------- 25 Section 15-Repeals and Amendments---------------------- 25 VI. Hearings---------------------------------------------------- 26, Summary of Testimony----------------------------------- 26 Realignment of Authority--------------------------------- 26 General Accounting Office --------------------------------- 27 Non- Government Witnesses------------------------------ 29, Executive Branch Positions------------------------------- 32' VII. Discussion of key issues--------------------------------------- 36 Location of the Office------------------------------------- 37 Authority of the Office------------------------------------ 38 Size of the Office----------------------------------------- 40, Responsiveness to Congress------------------------------- 40' Procurement by Grantees--------------------------------- 41 VIII. Changes in existing law--------------------------------------- 42, Appendices-------------------------------------------------- 45 (A) Extracts from the Report of the Commission on Govern- ment Procurement------------------------------- 45 (B) Witnesses-Hearings by the Ad Hoc Subcommittee on Federal Procurement------------------------------- 51 cm) Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 CIA-Rrmll 4 f Y t g%0130002-4 ~.a~e 93D CONGRESS 2d Session SENATE REPORT No. 93-692 OFFICE OF FEDERAL PROCUREMENT POLICY ACT OF 1973 Mr. GrimrES, from the Committee on Government Operations, submitted the following REPORT The Committee on Government Operations, to which was referred the bill (S. 2510), to create an Office of Federal Procurement Policy (OFPP) within the Executive Office of the President, and for other purposes, having considered the same, reports favorably thereon with an amendment in the nature of a substitute and recommends that the bill as amended do pass. The amendment is in the nature of a substitute, as follows : A BILL To ere ate an Office of Federal Procurement Policy within the Executive Office of the President, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Office of Federal Procurement Policy Act of 1973". SEc. 2. It is declared to be the policy of Congress to promote economy, efficiency, and effectiveness in the procurement of goods, services, and facilities by and for the executive branch of the Federal Government by- (1) establishing policies, procedures, and practices which will require the Government to acquire goods, services, and facilities of the requisite quality and within the time needed at the lowest reasonable cost, utilizing Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B00380R000600130002-4 competitive procurement, methods to the maximum extent practicable; (2) improving the quality, efficiency, economy, and performance of Government procurement organizations and personnel; (3) avoiding or eliminating unnecessary overlapping or d iiplication of procurement and related activities; (4) avoiding or eliminating unnecessary or redun- dant requirements placed on contractor and Federal procurement officials; (5) identifying gaps, omissions, or inconsistencies in procurement laws, re?;o:lations, and directives and in other laws, regulations, and directives, relating to or affecting procurement; (6) achieving greater uniformity and simplicity, whenever appropriate,, in procurement procedures; (r) coordinating procurement policies and programs of the several departments and agencies; (8) conforming procurement policies and programs, whenever appropriate, to other established Government policies and programs; (9) minimizing possible disruptive effects of Govern- ment procurement on particular industries, areas, or oc- cupations; ( 7.0) improving understanding of Government pro- curement laws and policies within the Government and by organizations and individuals doing business with the Government; (11) promoting fair dealing and equitable relation- ships among the parties in Government contracting; and (12) otherwise promoting economy, efficiency, and effectiveness in Government procurement organizations and operations. 1INDINGS AND PURPOSE i c. 3. (a) The Congress finds that economy, efficiency, and effectiveness in the procurement of property and services by the executive agencies will be improved by establishing an agency to exercise responsibility for and direction over pro- curemenr policies and regulations. (b) The purpose of f is Act is to establish an Office of Federal P rocurement Policy to provide overall leadership and direction, through a small, highly qualified and competent staff, for the development of procurement policies and regu- lations for executive agencies; in accordance with applicable laws. r>EF12UTIO:PTS 1;c.4. (a) As used in tFis Act,- 1) the term "executive agency" means an executive department as defined in section 101 of title 5. United States Code, an independent; establishment as defined by section 104 of title, 5 United States Code (except that it shall not include -tie General Accounting Office), Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : PIA-RDP75B0038OR000600130002-4 a military department as defined by section 102 of title 5, United States Code, a wholly owned Government cor- poration, and, subject to the provisions of subsection (b) of this section, the District of Columbia; (2) the term "Office" means Office of Federal Pro- curement Policy; (3) the term "Administrator" means the Adminis- trator of the Office of Federal Procurement Policy; and (4) the term "Federal assistance" means the provision of money, services, or property to a State, political sub- division, or person for the purpose of supporting, stim- ulating, strengthening, subsidizing, or otherwise pro- moting non-Federal activities benefiting a State, politi- cal subdivision, third party, or the public generally. (b) The Council of the District of Columbia, established by section 401(a) of the District of Columbia Self-Govern- ment and Governmental Reorganization Act, is authorized, on or after the date its legislative powers under such Act become effective, to pass an act making the provisions of this Act inapplicable to the Government of the District of Columbia. OFFICE OF FEDERAL PROCUREMENT POLICY Si~c. 5. (a) There is established within the Executive Of- fice of the President an agency to be known as the Office of Federal Procurement Policy. Functions exercised by the Of- fice shall be subject to such policies and directives as the Pres- ident shall deem necessary to effectuate the provisions of this Act. (b) There shall be at the head of the Office an Adminis- trator of the Office of Federal Procurement Policy, who shall be appointed by the President, by and with the advice and consent of the Senate. (c) There shall be in the Office a Deputy Administrator of the Office of Federal Procurement Policy who shall be ap- pointed by the President, by and with the advice and con- sent of the Senate. The Deputy Administrator shall perform such functions as the Administrator shall designate and shall be Acting Administrator during the absence or disability of the Administrator and, unless the President shall designate another officer of the Government, in the event of a vacancy in the Office. AUTHORITY AND FUNCTIONS Svc. 6. (a) The Administrator shall provide overall guid- ance and direction of procurement policy, and to the extent he considers appropriate and with due regard to the program activities of the executive agencies, shall prescribe policies and regulations, in accordance with applicable laws and, sub- ject to section 8 (c), which shall be followed by executive agencies (1) in the procurement of- A) property, other than real property in being; and B) services, including research and development; Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 :4CIA-RDP75B0038OR000600130002-4 (C) construction, alteration, repair, or maintenance of i eat property , and (2) in providing for or in connection with procurement of items specified in (..). (.L), and (C) above, to the extent required for herformancc of Federal assistance programs. (b) Nothing i.n subsection (a) (2) shall be construed- (1) to grant the Administrator authority to authorize p+?s)cuiernent or supply support, either directly or indi- rectly. to any recipient of Federal assistane.e; or (2) to authorize any procurement contrary to State an-i local laws,- in the case of programs to provide as- i e to States and political subdivisions- (c) ',"lie functioni; of the Administrator shall inchrde- (1) nronitorilrg an1l revising as necessary policies and regulations concerning the, role of the Federal Govern- rnent and its reliance on the private sector in providing go1rcLS and services required to meet public needs; 2) monitoring and revising as necessary policies and re -rrlitions to protect the interests and integrity of the 1mi,li( and private s,eeto:ns in the procurement of goods services; and (3) establishing a ay stem of Government-wide coordi- ii fed and. to the extent feasible, uniform procurement rc.! ul) prescribe policies and, regulations to be followed by execu- tive in the procurement of needed goods, services and facilities. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27: clA-RDP75B00380R000600130002-4 In exercising this authority, the Administrator of the Office shall carry out the, following specific functions : (1) monitoring and revising policies for reliance on the private sector; (2) monitoring and revising policies to protect the interests of both the government and private sector; (3) establishing a government-wide system of uniform pro- curement regulations ; (4) promoting the improvement of personnel programs for the procurement work force; (5) sponsoring research in procurement policies and practices; (6) developing and disseminating government-wide procure- ment, data; (7) establishing criteria and procedures for soliciting the view- points of all interested parties; (8) consulting and using the capabilities of concerned execu.- tive agencies in the development of policies and regulations. The authority of the Administrator is specifically restricted with respect to : (1) authorizing procurement by recipients of Federal assist- ance from Federal supply sources; (2) becoming involved with individual contract award or procurement decisions ; (3) prescribing procedures and forms, except when necessary for effective implementation of policies and regulations author- ized by the Administrator ; and (4) regulating procurement by the military departments when financed with nonappropriated funds. The Office is to be located in the Executive Office of the President to enhance its effectiveness and stature. To insure responsiveness to the Congress, S. 2510 includes several important provisions : (1) both the Administrator and Deputy Administrator of the Office must be confirmed by the Senate ; (2) no officer or employee of the Office may refuse to testify before or submit information to the Congress; (3) the Administrator shall keep the Congress "fully and cur- rently informed" of activities through annual reports, special re- ports, and advance notification of proposed major policy changes; (4) the Congress may reject any proposed major policy or reg- ulation through a resolution passed by either Rouse; and (5) authorization of appropriations is limited to $4 million for the first year and to such sums as may be necessary for each of only four years thereafter, at which time the Government Op- erations Committee in the Senate must review the accomplish- ments of the Office before authorizing legislation to continue its operation. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 :1c lA-RDP75B00380R000600130002-4 The bill declares that it is the. policy of the Congress to promote economy, efficiency and effectiveness in the procurement of goods, se:?v- ices, and facilities in the executive branch and provides a set of prin- ciples to be followed in carrying out this policy. This is the same enacted in Public Law 91-129, which served the Procurement Com- mission so well in planning and -,onducting its study of the procure- ment process for the Cougresss. In addition, the bill, through the creation of an Office of Federal Procurement Policy, would provide a focus for follow-through on the implement.ati.on of the report of the Commission on Government Pro- curement, w:itn its 149 recommendations. The OFPP is specifically mentioned in. 19 of the,Commiss.on recommendations, and would be directly concerned with many more of them. II. NEED FOR THE LEGISLATION Despite the magnitude of the expenditures by the Federal Govern- ment for needed goods, services and facilities (almost $60 billion an- nually irc recent years), there is no single point in the executive branch responsible for the policies that govern the procurement process. or is there a focal point to meet the demands for information, guidance and assistance from such diverse factions as small business firms, other business interests, Government agencies, or the Congress on matters involving government-wide procurement policies. Many segments of Government, operating to a large extent in an uncoordinated manner, make or strongly influence procurement policy, but there is no strong central leadership of the segments. The concerns voiced by the public over the past decade about the integrity and. effectiveness of Federal procurement need no elabora- tion. In recognition of these concerns, the Congress by passage of Pub- lic Law 91-129 in 1969 initiated the program that led to the introduc- tion of legislation (S. 2510) to fill the void in procurement policy leadership and responsibility that exists in the executive branch. The extensive hearings preceding enactment of Public Law 91-129 demonstrated beyond doubt that patchwork solutions to such perennial procurement problems as cost overruns, poor quality, and excessive paperwork would no longer suffice-that a comprehensive blueprint for brinaring about fundamental reforms in the procurement process was essential. The Commission on "Tovernment Procurement gave Con- gress the blueprint it sought. The establishment by law of an Office of Federal Procurement Policy, as called for in the legislation, was char- acterized by the Chairman of the House Government Operations Coin- mittee as the "'centerpiece" of the Procurement Commission plan for improving tha procurement process. The Procurement Commission put it this way : We have placed creation of a central policy office first among our recommendations because of its overall importance in achieving the improvements we propose in the procure- ment process. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : C1A-RDP75B0038OR000600130002-4 The Office is fundamental to orderly, timely implementation of the plan provided to Congress. The General Accounting Office, in monitoring the progress of the executive branch in responding to the 149 Procurement Commission recommendations, cited the long, laborious processing of the recom- mendations. GAO referred to the executive branch program as a part- time effort that would take at least several years to complete and rec- ommended several steps be taken to accelerate the program. In his testimony in support of S. 2510, the Comptroller General observed that the evidence amassed by the Commission indicates that an effective leadership role cannot be credibly satisfied by a low-key revitalization of the present structure. Accordingly, it is his recommendation that the OFPP be established by legislation now in order to provide the executive branch with the necessary mandate, stature, authority and continuity so essential to basic procurement reform. Even more revealing of the need for the legislation is the statement by the Administrator of the General Services Administration during Senate hearings on the bill that there is no alternative to a legislatively established OFPP. He concluded that without such an Office, the re- forms in government procurement advocated by the Procurement Com- mission would change from maybe 5 to 7 years to maybe 100 years. The conclusion reached by the Committee after five days of hearings, during which testimony was received from twenty-three witnesses, is that legislation is essential to the establishment of an office with sufficient stature and stability to bring about the required improve- ments in the procurement process. Additionally, legislation is needed to insure a high degree of responsiveness to Congress. Basically, the legislation prescribes an organizational arrange- ment to provide the executive branch with a focal point of leadership and coordination where fundamental procurement policies could be developed, debated, coordinated and, finally, published and imple- mented by the some 20 procuring agencies with reasonable consistency and authority. There are no direct savings associated with its estab- lishment; however, the potential for savings as a result of the impetus it would provide to the implementation of basic reforms in the way procurement is done in Government is unlimited. For example, a one percent improvement in Federal procurement would yield annual savings of a half billion dollars, and implementation of only one of the Commission's recommendations-increasing the small purchase dollar ceiling for use of simplified procedures would save approxi- mately $100 million annually. The need for the legislation is further illustrated by the following examples of things the OFPP could do to improve Federal procure- ment operations : (1) Arrest the proliferation of laws and diverse regulations and achieve desirable uniformity. (2) Initiate legislation to reform the presently fragmented and outmoded statutory base for procurement policy and at the same time consolidate or repeal the many redundant and obsolete laws. (3) Bring about government-wide exchange of successful ideas Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 7- ,,CIA-RDP75B00380R000600130002-4 and thereby vlcreas efliciencv and economy in government op- ( at.ions. (4) 11uild pul:lic coniidnncc in Federal procurement practices wiu Li a vi;:ible inlproven>eni. program responsive both to the l'residellt and the Congress. Primarily the, needs tint have been cited for the legislation cover h) t(le executive J rand1 a,nd the recipients of its procurement d1o119rP. ('orlgres , too, has sevendirect and prey ,ng needs for an OFI'P. I Uere n e five ad, rlitages t11~ t s~reh an Office would provide for C or gr ess i sel 1. it ,?c,,_!ulations -,w?oultl continue--tine difference would be that they would be consistent. Under the operating concept prescribed for the OFPP in the bill, the niajor orocuringg agencies, and particularly the Pepartairent of Defense, could have an expanded role in setting p:co- curemeirt policy in that the OFPP will employ them to develop pol- icies and ra,~llations having multi-agency or government-wide a pphcatioir. 4 r~Tn:ciitu,ATlci.r~ t>t' _Lel'EOPJUATIOXS Section 11 n laces a limitation on the appropriations to support the )(fide (bi inY the first; a ar after ena,?rnient of this legislation; estab- li ;hes a snlalimitaticur cirr fruuh; 'teed for research during that year; Approved` o' Welease}2000/08/2p7r :1 CIiA RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 be appropriated for only five year_s. Subsequent proposals for author- ization of funcls to be appropriated are to be referred to the Govern- ment: Operations Committed. and will be contingent on a conclusion by the Government Operations Committee that the Office has and will continue to promote the economy, efficiency, and effectiveness of Gov- ernment procurement. Fiscal year funding for the Office will be a concern of both the Government Operations and the Appropriation Committees. Section 12 authorizes the Administrator to delegate his functions to personnel in his office or to executive agencies with their consent or with the approval of the President, provided he does not delegate the, final policy-making decision to other agencies. The Adzniiiistrator is expected and encouraged to use the executive agencies to develop policies and regulations, but the final approval authority cannot be delegated. Subject to this restriction, deegation to other agencies of technical and detailed aspects of policy development is considered a necessary option if the Office is to operate with the small staff envisioned by the Commission. Section 13 places the salary of the Administrator at Executive Level III, presently $40.000 a year. No provision is incluclcd for the salary of the Deputy Administrator, but he is expected to be a GS-18. ACCESS TO INFORMATION Section 14(a) provides for the General Accounting Office to obtain information from the OFPP and have access to its records, Section 11(b) requires the Administrator to open to the public for- mal, scheduled meeting, to promulgate procurement policies and reg- nlatiolls, specifies that a ten.-day notice will be given of such meetings, and giver, him the, authority to determine those policies and regula tions to which this requirement is applicable. These meetings will give the public an. additional opportunity to express their views on highly sensitive or Significant issuances of the OFPP. This subsection corn- plements the provisions of the bill calling for the timely, effective solic- itation of the viewpoints of interested parties. In general, it is intended that the affairs of the Office will be conducted so as to give maximum practical public visibility to its rule-making activities. REPEALS AND AMENDMENTS Section 15 contains amendments to subordinate the General Services Administration (GSA) and the Federal Procurement Regulations (FPR), administered by it, to the policy direction of OFPP. The pur- pose is to bring GSA, along with the Department of Defense (DOD), under the authority of the OFPP. To accomplish this, Section 15(a) of the bill amends Section 201(c) of the Federal Property and Administrative Services Act (FPASA) (40 U.S.C. 481(c) , which provides for agencies to exchange used for new property "under regulations to be prescribed by the (GSA) Ad- ministrator." Section 15(a) would add "subject to regulations pre- Approved For Release 2000/08/27 : CIA-RDP75B00380R000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 scribed by the Administrator of the Office of Federal Procurement Policy." , Section 15(b) would amend Section 602(c) of the FPASA which provides that the GSA authority "shall not be subject to the pro- visions of any law inConsisten.t. herewith." Section 15(b) adds "except as provided by the Office of Federal Procurement Policy Act." VT. HEARINGS Five. days of public hearings were held by the Ad Hoc Subcom- mittee on Federal Pro(urement, October 31 and November 1, 2,14, and 15, during which the twenty-three witnesses shown in Appendix B testified. Statement, submitted for the record were received from the follow- ing organizations : Automotive Services Industry Association Committee on Federal Procurement of Architect-Engineer Services National Office Products Association National School Supply and Equipment Association Smaller Business AssociatiorrL of New England All of these statements endorsed the concept of the Office of Fed- eral Procurement Policy as embodied in S. 2510. Summary of Testimony: All witnesses, representing public, pri- vate and academic viewt)oints, supported the need for an "OFPP" of one kind or another to exercise leadership in formulating and coordi- nating procurement policy. While there were differences as to location, size and authority, there was agreement that improved leadership or coordination is needed. Industrial, professional, employee union, and independent witnesses all supported legislation " an immediate necessity. While agreeing with the objectives of the legislation, executive agen- cies said it is either not necessary or should be deferred, except for Mr. Sampson, Administrator of General Services Administration and a member of the Commission on Government Procurement, and Mr. Parker, Associate Administrator for Procurement and Manage- ment Assistance, Small Business Administration, who said it would be necessary. With those two ~-xceptions, all other executive agency spokesmen felt that the objectives of the legislation should be accom- plished through executiv ; branch action. This is not surprising in view of the statement by Mr. Zarb (Office of Management and Budget) that OMB did orchestrate the point of view of the executive agencies in that these agencies had the benefit of OMB's testimony. The views of :till the witnesse,3 on the key issues are summarized in the table on page 27. Realignment of Authority: In May, 11973, the President, by Execu- tive Order 11717, transferred to GSA authority for a number of func- tions, including procurement. This order established the General Serv- ices Administration as the President's "principal instrument," under the policy ovenii,!,ht of OMB for the development of procurement management systeips. This was done despite the fact that GSA itself is a major procuring agency and does not enjoy the organizational stature or authority to give policy direction to some agencies, especially the Department of Defense. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 27 Need Strong Central Need Leadershi ? Le illation? When? Location General Accounting Office Yes Yes Now EOP EXECUTIVE BRANCH: Office of Management and Bud et Yes Def 2 Mar.'74 OMB/GSA De artment of Defense Yes 3.1 01 Nov. 74 OMB General Services Administration Yes Yes Mar.'74 EOP Department o Health, Education and Welfare Yes Defer --- OMB/GSA National Aeronautics and Space Administration Yes Defer --- OMB/GSA Atomic Energy Commission Yes Defer - OMB GSA Department of Trans ortation Yes Defer --- OMB/GSA De artment o Agriculture Yes, Defer --- Small Business Administration Yes yes - INDUSTRY AND PROFESSIONAL ASSOCIATIONS: Aerospace Industries Association Yes Yes Now EOP ire _ctronic Industries Yes Yes Now EOP National Security Industrial Association Yes Yes Now EOP Technical Services ,Industries Yes Yes Now EOP Pro essional services Yes Firms Yes Yes Now EOP Office Machine Dealers Yes Yes Now FOP Wholesaler- istributors yes Yes Now EOP Scientific Apparatus Manufacturers Yes Yes Now EOP FEDERAL EMPLOYEE,UNIONS: AFGE Yes Yes Now Outside EOP- Agent o NFFE Yes Yes Now Congress INDEPENDENT WITNESSES: Regulatory American Bar Association Yes Yes Now Agency John Cibinic (George Washington University) Yes Yes Now EOP* Regulatory Matthew Perlman Yes Yes Now Agency The proposed executive branch arrangement for achieving govern- ment-wide direction of procurement policy is shown in Figure 1 (p. 28). This figure, which was prepared by the General Accounting Office, also shows the structure proposed by the Procurement Commis- sion. As will be noted from the footnote on the figure, S. 2510 would locate the Office in the Executive Office of the President rather than specifying OMB as the favored location. Other differences in the Pro- curement Commission and OMB proposals are also applicable to S. 2510. GENERAL AGCOTINrING OFFICE The Committee felt that key testimony was rendered by the Honor- able Elmer B. Staats, the Comptroller General of the United States, because of his experience on the Commission on Government Procure- inent and GAO's government-wide perspective on procurement. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 28 COMPARISON OF MANAGEM ENT! TRIICTUBE$ PROPOSED BY COMMISSION AND OMO FOR EXECUTIVE BRANCH IEADERSHP/COOROIWATION OF PROCUREMENT POLICY 1111! PREIII)EN1 I XEi UTIVE OFFICE OF TI{L PRESIDENT EXECUTIVE OFFICE OF THE PRESIDENT OMB DIRECTOR - UM W I FFDlRAI COUNCIL } ' !Mead, .f melr ~Ii1ErvY DEPUTY - ~ ' DEPUT Y AIt T11~NITV ~ DRFOROR 1$ A'SIST ANT OF PP 91ao MsEe nd er1 DEP Y. ASSISTANT Q~mr . rime) TY DIRECTOR II, e N.. y Ilor ru ; .' nwr , _J ~_1 INTERAGENCY PRCr JRFMEr.T ~-- 1 POLICY ADVISORY crzoDP_ GSA AOMINI 11 BATOR DEPUTY ASSOCIATE AUTHORITY/ ff I'ONSIVEMES, RESI'ONSIAILITY: TO TEE CONGRESS; rr,m eI ,RU,e.~.. minor n. M1;aa,eR mved b; NEenAdl.'.I_.CCOS ubcnnMmm. ,Iv.r.I?. ,h. t1FPP In u?, wxv~+innrvl m Se appinted by Ibe Pr_dmr a tleder.l l'rv..~reni.n1(S. 15101 and M1evJs .iIM1? n ulvl a entl cvns,en~IV1 IM1e Smsre. fionlce: General Accounting Office Lepori to the Committee on Government Operation,, House of Represontntlves, on the Pro;re5- of Executive Branch Action on Reeoenluend.E- fiom of he Commission in Gov:rrnment Pr-nreinrnt, January 31. 1974. Mre Staats strongly supported S. 2510 and stated: The Administration acknowledges that legislation may eventually be needed to clarii:f y the authority to issue regula- tions binding on all agencies but feels this should be deferred (at least until. next March) while revitalization steps pro- ceed-including the building of an OMB staff and further review of the. Commission's 149 recommendations e . . It is our position, Mr. Chairman, that a clear congressional mandate, with the stature and continuity which this would confer, is es eutiaL Later, Mr. Staats gave what he thought to be the "three vital con- clusions" for corlgressiona1 consideration in these words : Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/272, CIA-RDP75B0038OR000600130002-4 AA statutory OFPP appears essential, both to obtain adequate action on Procurement Commission recommenda- tions and to build public confidence in the procurement process. B. Senate Bill 2510 has incorporated revisions proposed in House Bill 9059 and meets the Commission's objectives. C. The strong leadership role to which OMB is committed should be encouraged and would be greatly enhanced by Sen- ate bill 2510. Mr. Staats also pointed up a central fact that was becoming increas- ingly apparent to the Committee: Witnesses outside the executive branch generally feel that further delay is not warranted and that the executive branch will not, in fact, act unless a congressional manadate is provided. NON-GOVERNMENT WITNESSES John Cibinic, Jr., an expert in contract law and Director of the Government Contracts Program, National Law Center, at the George Washington University, called for the immediate enactment of S. 2510. Dr. Cibmic chastised the Congress for having taken a "wait and see" attitude for so long, as follows : As I sat here this morning, listening to the testimony that has gone before and immediately preceding as well, the feel- ing I had is that we are supposed to wait and wait and wait. The purpose of my statement is to indicate that I think we have waited too long already. It was in 1966 that the Congress in a House report first rec- ommended to the: executive branch that it do what this bill is now stiggesting be done, I mean, ordering to be done. And I haven't seen any action yet taken by the executive branch to respond to those recommendations back in 1966 to establish a Presidential group to centralize policy-making or to estab- lish an Office of Federal Procurement Policy as recommended by the U.S. Commission on Government Procurement. Every- thing that I have seen and heard after the Procurement Com- mission's report has been issued appears to me to be more of what I like to term "the regulatory reaction syndrome." It goes something like, do something when, somebody points a finger at you and then when they start pointing the finger at somebody else then you don't have to do anything more. I just don't see any reason why Congress should wait and be put off any longer. The subject of Federal government contracts is so complex and so important that an independent, centralized, on-going policy group with authority to require procurement agency adherence to its promulgations is absolutely necessary. Professor Cibinic also recommended that the Committee consider establishing the Office of Federal Procurement Policy as an independ- ent agent of Congress if it becomes an "unwanted stepchild" in the Executive Office of the President. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : 9 A-RDP75B0038OR000600130002-4 George Al. Coburn, Secretary of the Public Contract Law Section of the American Bar Association (ABA), stated that the policy- making body of the ABA endorsed S. 2510 in principle. Mr. Coburn called for legislation immediately, stating that : . wE cannot agree that action by the President or OMB without enabling legislation, can overcome the problems of the procurement regulations so well identified by the report of the Procurement Commission. Matthew Perlman, a Washington attorney and Charles O'Connor III, the legsi: counsel for the Sc,'entijlc Apparatus Manufacturers As;ora both offered suggestions regarding legal terminology in the bill. However, both agreed to the need to legislatively establish an Office of Federal Procurement Policy. Mr. Perlman recommended that the Committee give thought to creating the Office of Federal Procure- ment Policy in a like manner to the Federal Power Commission or the Federal Communications Commission in an effort to make the Office as non-political and professional as possible. Michael Forseey, Legislat+ve Council of the National Federation of Federal I'm ployees, raised questions about the present executive branch plan, stating : Presently, two Federal agencies have primary responsi- bility for procurement matters--the Office of Management and Budget and the General Services Administration. For different reasons each is uniquely unsuited to perform the function envisioned by the Procurement Commission. We believe the Congress has no intention of permitting the continuation of the status quo in the procurement field by permitting OMB to revitalize the program. But you must ask yourself if establishing a p ?ocurement office in the executive branch merely changes the form but not the substance. r_7/de 31. TVebber'. President o! the dmericanFederation of Govern- wen,t Kmido-r/ees. likewise raised the question of where to place the OFPP. Mr. Webber's views. presented by Stephen Koczak, pinpointed past drsagreeement with ON 13 and GSA, particularly in the area of c?ontr^eetictrc out of support services. In his opinion, only an office out- ;,id(' the h,secutive Office of the Iresident could operate in an impartial and objective manner. Industrial associations which offered testimony on the creation of an Office of Federal Procurement Policy all agreed with the objec- tives of th,' lecislatioir. V..1.._1da' e;, President of the Electronic Indus r ec Association, stated : For many years we have been concerned with the prob- loms affecting, Federal procurement. Almost four years ago we test fied in support of the bill which established the Com- mission en Government Procurement, and we supported its eil'orts by nominating personnel from our industries to serve on the study groups. Ojw of the most important recommendations of the Com- Wissioti--integral to many of its other recommendations-is Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/2731 CIA-RDP75B0038OR000600130002-4 that calling for the establishment of an Office of Federal Pro- curement Policy. Many of the difficulties involved in govern- ment procurement were attributed to both a lack of leader- ship and to the lack of a central point of authority on basic procurement policy. The Commission unanimously recom- mended that such an office be established. Other industry leaders and association representatives reiterated Mr. Adduci's position of support. An expression of the need for an executive branch focal point for government procurement was found in the testimony of each industrial representative. The President of Aerospace Industries Association of America, Inc., Idyl I-Iarr, Jr. repeated his commitment to procurement reform in the government when he stated : As I testified four years ago, the extensive complexities of the vast buyer-seller interface emphasize the need for con- stant reevaluation, in depth, of the basic principles which govern the government/ industry relationship and the most careful application of these principles to specific matters. In short, the aerospace industry believed in 1969 that this mat- ter alone was ample justification for the establishment of the Commission. Now, more than ever, we feel that the procure- ment system warrants specialized attention, both in the Con- gress and in the executive branch. Dice-Admiral J. M. Lyle (retired), President of the;National Se- curity Industrial Association, called the establishment of the Office of Federal Procurement Policy as outlined in S. 2510 "a desirable im- provement in the government procurement process." Admiral Lyle also suggested that, as a matter of guiding principle, the Office should strive to achieve and maintain a proper balance be- tween the special needs of public accountability (public officials spending public money) and the advantageous forces of the free en- terprise system and the commercial market place. Admiral. Lyle concluded: The Office should be appropriately linked with action to re- vise the basic procurement statutes along the lines recom- mended by the Commission on Government Procurement. TT%illiam C. MCCamant, Executive Vice President _o f the National Association. o f Wholesale-Distributors, stated : Because wholesale distribution serves as a major channel for the procurement of goods and commodities for Federal agencies, our association has been long concerned with gov- erninent procurement policies and practices... Mr. McCamant urged Congress to establish an Office of Federal Procurement Policy and to establish the concept of "lowest economic cost"' in all procurement decisions. John F. Ella notti, Jr., the Secretary-Treasurer of the National Council of Professional Services Firms, stated during his testimony : Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : Cj)A-RDP75B00380R000600130002-4 The Office of Federal Procurement Policy would be estab- lished within the Executive Office and thus be independent of an,y agency with operating and procuring responsibilities. This is essential if the Offr.-2is to function effectively. By es- takrlish:uug the Office of Federal Procurement Policy within the Executive Office, above the plane of operating agencies, S. 2iI(' enhances its capability to develop a meaningful and effective policy of reliance upon the private sector. Edward Leeson, h'reeuti zee Ilireefor, National (,'ouncil, of Tech- nical A'ervices Industries, declared: Our council. solidly supports enactment of this bill. Mr. ('liai rman, and member, of the Committee, as we see the situa- tion today, there is unanimity of 09 opinion by industry, the Comptroller General of the T nited tates and the Commis- sion on Government Procurement that a need exists for im- provement in this important area of Federal procurement policy. N. Davie? Palmeter, the 1t'ashit?gton counsel, for the National Office Mach-ine Dealers Association. cited the fact that the Govern- ment is: ... a major customer for NOM DA members. We are there- fore vitally interested in the procurement process ... Accord- ingly, we strongly endorse the creation of an Office of Federal Procurement Policy . . . as set forth in S. 2510. Mr. Palmeter also recorded a "strong preference" for the creation of an independent. Office outside GSA or OMB. EXECUTI\E BRANCH POSITIONS O fj`ice of Management and Budget,- During House hearings in July, Mr. Dudley C. Mecum. Assistant Director of OMB, who was re- sponsible for OMB's procurement efforts, requested a delay in legi~la- tion to give the executive branch an opportunity to implement its plan, Ile said this would be done by the end of August. Shortly thereafter, Mr. Mecum left OMB, and his duties were incorporated under another Assistant Director, Mr. Frank Zarb. 1)uring Senate hearings on October 31, Mr. Zarb appealed for a delay in legislation until March, 19 1,74 so that the executive branch could implement its plans which remained unfulfilled. Since that time, Mr. Zarb has been reassigned. The Chairman of the Procurement Subcommittee sumrnarized the situation in questioning the OMB witness : Senator CIInFs.In testimony of OMB before the house in July, the statement, was made that the executive branch con- cept of the Office of Federal Procurement Policy would be fully implemented by the end of August. Your request at that tine was that you be piven some time to prove out your approach before legislation is considered. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 g3CIA-RDP75B00380R000600130002-4 It is now almost November. How much still remains to be implemented in your plan? Mr. ZARB. Mr. Chairman, there has been some delay, par- ticularly in the -area of recruiting our top team, not because of a lack of activity on our part, but because of the rigorous process which we are following to attempt to find the most appropriate people to do the job. In short, what I am saying is, our commitment is there; our allocation of resources is there. We are moving forward in interviewing the appropriate people and developing the appropriate policy statements of the people who will be work- ing primarily in my office. W have not let that delay the on- going work of reviewing the Commission's recommendations. GSA has continued along its road and made significant strides in that area. Senator C111 1M. I do not quite get from that an answer. First you said it would be fully implemented by August, I still do not have a date. Mr. ZARB. Mr. Chairman, it is our objective to have our stop man on board by the end of November. I hesitate in giv- ing a specific date because much depends on the final selec- tion of a candidate and his acceptance and the time it might take him to separate from whatever "responsibility he has. We Are close to several candidates and that is clearly the spark plug for our on-going program at OMB. Senator Cran,ns. You are still a long way. from your pre- diction that you would have the program fully implemented by August? Mr. ZARB. We are a long way from that goal. At the end of January, 1974, The Procurement Council had not been established; The Deputy Assistant Director for Procurement Policy had not been appointed; Mr. Zarb had been assigned to another position in OMB ; and In the absence of a congressional mandate, other national prob- lems and priorities prevent any full time attention to this matter in OMB. Aside from the repeated delays in implementing the executive branch plan, the plan itself will not meet. the 'need for effective cen- tralized direction for procurement policy. The above sequence of prom- ises, unfulfilled commitments, and. displaced personnel that has occurred verify the need for a firm statutory base if the Office is to enjoy the stature and continuity necessary to provide government- wide leadership. The General Accounting Office concluded this point in the following extract from their September, 1973 quarterly report to Congressman Holifield on executive branch implementation of Com- mission recommendations: Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : q!A-RDP75B00380R000600130002-4 We understand that, implementation has been delayed because : There have been difficulties in clearly establishing re- sponsibilities for parts of the management structure. (013 staffing of its part of the management structure has been deferred pending internal budget approval. It. is considered premature to establish the Procurement i Council before the new OMB Deputy Assistant Direc- tor for Procurement -Policy is available to help oversee i.ta, formulation. Continued delay in establishing this management striie- ture and the lack of assurance that this approach can achieve the objectives sought by the Procurement Commission con- firms the opinion we and others expressed during your Com- mittee's hearings in July that a statutory mandate is required at the earliest practical time. We therefore strongly recommend that congressional ac- tion be taken at an early date authorizing and directing the President to establish an Office of Federal Procurement Policy either in the Office. of Management and Budget or elsewhere within the Executive Office of the President. During questioning of Mr. Zarb on the proposed OMB/GSA orga- nization plan, as displayed in Figure 1 of this report, Senator Nunn concluded that the arrangement has very little application to any kind of set up that would really centralize procurement. He pointed out that OMB had only ratified the status quo. The GAO, in its aforementioned September, 1973 report, made the same point in this way : ... i hybrid office located partly in GSA, OMB, and pro- curement; policy groups represents the situation which has generally existed for years and the arrangement under which the present-day confusion exists. It provides several layers of approval for policy guidance and fragments the responsi- bility of a newly emerging organization in need of clear-cut and manifest authority. Testifying for the Departmenr of De fense, Assistant Secretary A. I. Mendolia, asserted that department-wide regulations from DOD would possibly serve as a model for government-wide adoption and that DOD is very much in favor of increased cooperation and coordi- nation on a. government-wide basis to improve the procurement process. Calling for a year to see if an interagency council could successfully deal with the Commission cn Government Procurement reco- mendations. Mendolia said that The establishment of an Office of Fed- eral Procurement Policy should be undertaken only if the execurive branch fails to deal with the matter adequately. The position of the Department of Health., Education, and Welfare was essentially that the General Services Administration (GSA) is already effectively coordinating proposed executive branch positions on the issues raised by the Procurement Commission. Testifying for Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 CIA-RDP75B0038OR000600130002-4 HEW, Assistant Secretary Robert II. Marik declared that the depart- ment had already begun to implement the Commission's recommenda- tions, to some extent, within the department. Witnesses representing the Atomic Energy Commission, National Aeronautics and Space Administration, Department of Transporta- tion and Department of Agriculture echoed OMB's basic position that, although a government-wide procurement policy is highly de- sirable and sorely needed, legislation should be deferred until the Ad- ministration has had an opportunity to fully implement its own plans pursuant to Executive Order 11717. Mr. Marshall J. Parker, Associate Administrator for the Small Business Administration, cited the problems that small . businessmen usually have in procurements involving different agencies. Ile said that a government-wide system, under the direction of a central au- thority, would be of great benefit to small businessmen. In response to questions by Senator Iluddleston, Mr. Parker agreed with the need for an Office of Procurement Policy and stated that legislation would be needed to give the Office a proper base. Senator IIUDDLESTON. T know in my State, Kentucky, we frequently, under the auspices of the State government, con- duct seminars to try to give small businesses and other busi- nesses too the necessary information on how to compete for or bid for or seek government contracts. Do you think this situation would be alleviated if we had a central department that could feed out to them the proce- dures for the entire government at one time? Mr. PARKER. Yes, sir, I do . . . we try to do the same thing nationwide with small businesses, introducing them to govern- ment procurement and to competitive bidding procedures and telling them how to do it. And we have, if you will pardon the expression, a heck of a time. trying to educate them on all of the different myriads of regulations that the different agen- cies have. Senator IIUDDLESTON. And you feel the government would benefit by being able to purchase, at least with no additional cost, those services and goods if the procedures were simpler so that more businessmen could actively seek business .with the government? Mr. PARKER. Certainly there would not be or should not be any additional costs, and it would certainly tend.toward lower costs because more competition would be developed because more would be encouraged.. A lot of small businesses today, and perhaps some of the larger ones, are turned away by the complexity of the poli- cies of the procurement regulations. Senator IIUDDLESTON. I understand that the administra- tion wants to upgrade GSA's responsibility in this field. What is your judgment? What impact would that have,? Mr. PARKER. We would welcome any improvement in the situation toward obtaining a centralized source"of policy and Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 direction and leadership. We think that it could do nothing but help. ,motor HZrnni.ESTON.'io you feel that a separate agency or separ_tite office would be m,)re effective? Mr. P Axon,. Yes, sir, we do. Quite personally, we favor that it be by statute. Adrninistrator of en.eral, S`a; 2 i.ce Ad7rainist~^atian and lormer~nem ber o -F the Procurement Commission, the Honorable Arthur Samp- son. also departed from the GMIB position to call for legislation to deal with procuremeiit problems and to create an Office of Federal Procurement Policy. M S, sPSON. Mr. Chairman? I submit my prepared state-. ment. for the record, but I would like to state strongly that I air- for an Office of Federal Procurement Policy. It has tc have directive authority. Sampson, he.nator Cr-rrrrs. Mr. Sampson, we are aware of your back- as a Commissioner on the Commission on Govern- ment Proenremeltt. Do you feel that legislation might be rrcedeci_ to implement t0( objectives of the Commission heport; ?' Mr. ~,~nrr,~Orr. Yes, Air, Chairman. I see nothing incon about going on with what, you have here (S. 2,510). By he time the legislation is finished, the executive branch will have had tithe to form its position. ';4 1 V tor C~Tr,rs. What Ave arc talking about then is early sp.rin a~ ? yfr. ;3~~~~rsr> J. Yes. Conclusion Overall, the hearings left a convincing record of sup- port for the legislation and its immediate enactment, The Ranking Minority Member, Senator Roth. concluded : l reel that the witnesses made a very strong case, frankly, for the need for legislaton. When I first came in, I had a question in my own mind whether it was essential, but I will say at this juncture I feel very strongly that we ought to move ahead. Changes suggested by each witness received specific consideration during Subcommittee markup. Most of these are discussed in the next section of this report. VII. DISCUSSION OF KEY ISSUES The principal issues which surfaced during the hearings and the Committee deliberations concerning this legislation to establish an Office of Federal Procurement; Policy are outlined in the chart of witnesses in the Hearings section or are discussed in this part of the report. The Positions of the witnesses with repect to the need for an OFPP, whether it should be established by legislation, and if by legislation, when it should be enacted have been discussed. Issues to be covered here are : Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 37 Location Authority Size Responsiveness to Congress Procurement by Grantees It should be noted that the first four issues address the major at- tributes the Procurement Commission said the Office should possess. These are : (1) Be independent of any agency having procurement respon- sibility. (2) Operate on a plane above the procurement agencies and have directive rather than merely advisory authority. (3) Consist of a small, highly competent cadre of seasoned procurement experts. (4) Be responsive to Congress. Location: S. 2510 locates the Office in the Executive Office of the President (EOP), which includes the Office of Management and Budget (OMB). The Procurement Commission preferred placement in the Office of Management and Budget, but thought the President should have the latitude to place the OFPP anywhere in his Executive Office. Other locations recommended by witnesses included an inde- pendent regulatory board or commission or an office in the legislative branch like the Cost Accounting Standards Board. Placement of the OFPP in the Executive Office of the President is consistent with three of the aforementioned attributes that it be : (1) Independent of any agency with procurement responsi- bility. (2) On a plane above procurement agencies. (3) Small in size. The fourth attribute-Responsiveness to Congress-will be discussed in detail later in this part. The Committee recognized that placement in the EOP should make the Office effective in dealing with executive branch procurement ac- tivities, the General Accounting Office, Congress, and the public. Ad- ditionally, placement in the EOP would give the Office a government- wide perspective and place it in a position to consider procurement policy in an objective manner. Should the President locate the OFPP in OMB, it is imperative that the Administrator be at the Deputy Director level with no other re- sponsibilities. This is necessary to ensure the identity, level of au- thority, and continuity of effort necessary for effective leadership of the procurement function. S. 2510 specifies that the Administrator will be at the Executive Level III, presently $40,000 a year. Recent ex- perience of OMB in assigning leadership for procurement at a level lower than Deputy Director to an official with other duties verifies the need for placement as set forth here-two officials assigned the pro- curement responsibility in OMB have left this position in the past few months. Both of these officials experienced difficulty in recruiting a full-time nationally known procurement expert at the contemplated Deputy Assistant Director level. Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 s Representatives of the Federal employee unions and the Barr asso- ciations expressed the fear that tl:te OFPP could not function in an objective manner if located within the EOP. They said that it should be placed in as professional and non-political setting as possible. Their suggestions were to establish it as a regulatory conunission with 3-5 members or as an independent agent of Congress. The Committee rec- ognized the merits of these arguments but did not adopt these sugges- tions because they are not compatible with the testimony of most witnesses or the Procurement Commission recommendation. There was a real concern in'the Committee: that setting the Office up as a com- mission. would lead to yet another large bureacracy. The Committee will follow closely the actions of the executive branch to create the kind of organization defined by legislation and described in this report. The annual reports and the comprehensive review precedent to appropriating funds at the end of five years pro- vide a mechanism for this oversight. Authority: Directive authority is fundamental to the leadership role assigned to the OFPP. This authority is provided in several ways. First and foremost, S. 2510 sets forth a clear congressional mandate that the OFPP is the President's agent to bring about long overdue and fundamental improvements in the procurement process. The bill gives the Office the stature and authority necessary to carry out its mandate. Second, placement of the Office in the Executive Office of the Presi- dent in a position between the President and the procuring agencies gives it the stature and "clout" exercised by the executive. Unlike many EOP offices, the OFPP would be bolstered by a firm statutory base. Third, the bill defines in considerable detail specific authorities and functions of the OFPP and their limitations. Following are the more significant questions and concerns regard- ing the authority and functions of the OFPP which surfaced dur- ing the hearings and the Committee deliberations : (a) Perhaps the most often expressed concern of witnesses was that the extension of the authority of the Administrator to re- cipients of Federal assistance would permit the Administrator to reverse current policy and authorize executive agencies to provide procurement and supply support to Federal grantees. Such was never intended. In response to these concerns, a prohibition was added to make the intent of the Committee clear in sect:on 0(lr) (1). (b) Another subject of great interest and concern to the wit- nesses was the national policy to rely on private enterprise to satisfy the needs of government for goods and services. In con- orrnance with the general rule followed in drafting this bill that it would t e "" oriented, the Committee informed these witnesses that the Procurement Commission's recommenda- tions on this subject would be considered in full at an early date. The bill says ony that the OFPP will monitor and revise as necE;s- sary this policy. The policy itself is set forth in OMB Circular A-7E;. (e j A basic thrust of ,his legislation is to enable business ~ o be more efficient in supplying; government. The cost of govern- Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/2-9x CIA-RDP75B0038OR000600130002-4 ment procurement is increased by unnecessary regulations and too much paperwork. Unfortunately the tendency is to add a new regulation every time someone complains about a bad contract. The Committee had two thoughts in mind-first, confine regula- tions to those that are going to promote efficient purchases and, second, simplify unduly complex regulations so that government and industry are not unnecessarily burdened. The Committee ex- pects the OFPP to review selected old procedures of the agencies- adopt the good and discard the bad. One of the most valuable things the Office can do is to examine the costs of the various agencies in awarding contracts. Studies of agency procurement systems the OFPP may conduct relative to this point should be for the purpose of determining the effectiveness of basic procure- ment policies for which the Office is responsible and not for evalu- ating agency operations and procedures. Some things that would reduce costs government-wide are covered in a recent report of the General Accounting Office (B-168450) entitled "Ways For The Department of Defense To Reduce Its Administrative Cost of Awarding Negotiated Contracts." (d) The industry witnesses were universal in calling for early solicitation of their viewpoints in the formulation of policies and regulations. They generally did not feel that they had an oppor- tunity to participate early enough in the process to be effective. The Committee's sympathy with these concerns is reflected by the inclusion of the word "timely" in describing this function in the bill. The manner in which this solicitation will be accomplished is to be developed in the course of implementation of a specifically related Procurement Commission recommendation. (e) Working in close coordination with the Small Business Ad- ministration (SBA), the Office should be of great assistance in achieving the desires of Congress with respect to the small busi- ness community. This cooperative effort should be especially pro- ductive in implementing the Commission recommendations re- lated to small business. Heretofore, there has not been a focal point in the executive branch with whom the SBA or small busi- ness representatives could deal on procurement policies having a multi-agency application. While the Committee believes that the OFPP should be open, accessible and informative in all of its rela- tions with the private sector, this is particularly important where small business is concerned. One way in which the OFPP might improve its accessibility is through periodic regional meetings with business. Most small business firms simply cannot afford to come to Washington, but they are entitled to be heard. There is little question that government activities in the field would be equally receptive to regional meetings with the OFPP. (f) Some concern was expressed by one of the witnesses that the Administrator is required to consult only with the executive agencies affected and not with industry. In amending the legisla- tion, the functions of the Office were revised to make it clear that there is no such intent. Section 6(c) (7) speaks to timely solicita- tion of viewpoints of interested parties, and Section 6(c) (8) deals with both consultation with affected executive agencies and solicitation of their views in developing policies and regulations. These are considered parallel sections, providing for inclusion of Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 Approved For Release 2000/08/27 : CIA-RDP75B0038OR000600130002-4 40 n~ the r?overrtrnent and private sectors in the rule. ) 'U1-.:M ggesti,nr, was nraela to the Comr..ittee that the 01 PP n ?d 1 fi ol;-ed in the'. draiing of specifications employed in r c __zr? .na_nts. On(, w fnesss proposed that the Once shou_d be