The Secretary of Interior advised the committee in February 1968 that the National Park Service and the Death Valley Hotel Co. were close to agreement on a memorandum of understanding under which the United States would purchase certain undeveloped private lands within the monument and quit-claim to the company part of the water supply in the Furnace Creek area. On September 30, 1969, the National Park Service advised the committee that the memorandum of understanding, which was signed in November 1968, had been partially accomplished with the assistance of a foundation known as The Nature Conservancy through a revolving fund of $5 million provided by the Ford Foundation. The Nature Conservancy advanced $375,000 as the consideration from the United States pursuant to the above memorandum of understanding. The Park Service assigned its rights to 7,600 acres under the memorandum of understanding to the foundation, keeping an option to repurchase for the same figure plus interest. Thus, the foundation temporarily holds the legal title to this land, but has no right whatever to the use of any water. The Appropriations Committee has knowledge of this agreement, and the Department's fiscal year 1971 budget request carries a line item representing the $375,000 repayment to The Nature Conservancy for its conveyance of the land to the United States. The committee was also advised that there were no present plans for Park Service development in this area. 10. Identical Bidding in Public Procurement and Property Disposal. Summary. The committee has been concerned with this matter since 1961, when it considered legislation to provide for public information on identical bids to public agencies, a measure subsequently passed by the House.18 Under Executive Order 10936, April 24, 1961, the purpose of which is to make enforcement of the antitrust laws more effective, agencies must report to the Attorney General identical bids in advertised procurement and property sales for more than $10,000. State and local governments are invited to transmit identical bid information to the Attorney General. Eight reports to the President have now been issued by the Attorney General on identical bidding in public procurement and property disposal. The eighth report, dated July 31, 1969, showed that in 1968 identical bidding affected $32.2 million of advertised Federal, State, and local government procurement. This was a decline of 8.6 percent from the $35.2 million reported in 1967 and was the smallest volume of procurement yet reported for 1 year. On the other hand, identical bidding in the disposal of Federal property increased during 1968, when 60 reports were submitted involving $95.5 million in sales. This compares with the 1967 totals of 37 reports involving $34.6 million in sales. In all reported cases the reporting disposal agency has been the General Services Administration. The 1968 increase appears to be attributable to larger disposals of silver and mercury by GSA. Questions raised by the report are now under study. 18 An outgrowth of this committee's interest was adoption by GSA and DOD in their respective procurement regulations of requirements for certifications of independent price determination in Federal procurement contracts (41 CFR 1-1.317 and 1-2.201 (a)(28): 32 CFR 1.115 and 2.201(a) (33)), With respect to property disposals, see 41 CFR 101-45.4926. OTHER MATTERS Action at the full committee level was taken with respect to a variety of additional matters: A. Several items received considerable attention at the full committee level but are treated below under the section covering the Special Studies Subcommittee: 1. The full committee staff assisted the subcommittee in connection with a wide range of matters involving the Federal donable property program as well as the program of the Agency for International Development for utilization of excess personal property. 2. The full committee staff assisted the subcommittee in connection with its investigation and hearings on the Office of Economic Opportunity's neighborhood health services grant to the Medical Foundation of Bellaire, Ohio. 3. The full committee staff assisted the subcommittee in connection with certain consumer protection matters, including the report entitled "Government-Rejected Consumer Items" (H. Rept. 91-773). B. Other matters handled at the full committee level included 1. Preparation of information, at the request of the chairman of the Senate Subcommittee on Separation of Powers, relating to presidential or executive impoundment of funds. 2. A memorandum prepared and forwarded to the Government Activities Subcommittee concerning section 412 of S. 2864 of the Housing Act of 1969, which section dealt with transfer of Federal excess real property to the Department of Housing and Urban Development for sale or lease for low or moderate income housing. 3. A draft of a bill to change the fiscal year of the U.S. Government to the calendar year was prepared along with an explanatory memorandum discussing some of the problems involved. 4. Prepared a letter to the chairman of the Legislative Reorganization Subcommittee of the House Rules Committee discussing a number of features of the proposed legislation, dealing particularly with their relationship to the procedures and practices of the Committee on Government Operations. 5. The full committee staff prepared the committee budget, the justification there for and accompanying material for presentation to the Committee on House Administration and for use in discussions on the floor. MILITARY OPERATIONS SUBCOMMITTEE HON. CHET HOLIFIELD, Chairman I. Investigations A. INVESTIGATIONS RESULTING IN FORMAL REPORTS 1. Government Procurement and Contracting (Commission on Government Procurement House Report No. 91-468, August 12, 1969). (a) Summary.-Preparatory to reporting out H.R. 474, the bill to establish a Commission on Government Procurement (see II. below), the Military Operations Subcommittee conducted extensive investigations into government procurement. Problem areas considered in the hearings and summarized in the report were the following: Modernizing the Procurement Statutes Training of Procurement Personnel Procurement Organizations Promoting More Competition Incentive Contracting Total Package Procurement Source Selection and Performance Evaluation Government-Furnished Property Truth in Negotiations Cost Estimation Profits and Risks Reduction of Paperwork Procurement Against Poverty Fair Employment and Public Contracting Patents and Proprietary Data Conflicts of Interest Bid Protests Contract Appeal Board Structure Rights of the Subcontractor Financial Risks of Catastrophic Accidents (b) Benefits.-The extensive hearings had these beneficial results: (1) to lay a solid fact base for successful consideration of H.R. 474, the bill to establish a Commission on Government Procurement: (2) to identify important problem areas and promising lines of investigation for consideration by the Commission; and (3) to encourage remedial action of a more immediate nature, where appropriate, by the Government departments and agencies. Considering that total Government expenditures each year for the procurement of goods, services and facilities approximate $55 billion, we estimate conservatively that the short-term and long-term committee investigations and the work of the Commission on Government Procurement will yield savings of $550 million a year, which requires only a one percent increase in procurement efficiency. (c) Hearings. For hearing dates, see II. (d) below. The hearings required more than 30 separate sessions and the appearance of more than 100 expert witnesses. The hearings were directed along these lines: 1. To hear from the Government departments and agencies which account for the great bulk of procurement spending. These include the Department of Defense, National Aeronautics and Space Administration, Atomic Energy Commission, and General Services Administration. Since the Department of Defense is preeminent in the spending of procurement dollars, the subcommittee examined procurement at the Defense level in terms of policy, funding controls, contracts administration, and contract auditing. Procurement functions and activities of the Defense Supply Agency and the several military departments also were reviewed. There was considerable discussion of problems associated with selected weapon programs, such as the Air Force's C-5A cargo aircraft, the Army's Cheyenne helicopter, and the Navy's shipbuilding. 2. To get a cross-section view of civil agency procurement, with particular attention to those departments and agencies which have a potential for substantially increased procurement as efforts are made to solve pressing urban problems. The subcommittee took testimony from the Departments of Health, Education, and Welfare, Housing and Urban Development, Transportation, and Post Office and from the Veterans Administration. Significantly, some of the strongest endorsements of the bill in the executive branch came from heads of the newer departments-HEW, HUD, DOT. 3. To examine the procurement process from the standpoint of those agencies whose regulatory, investigative, administrative or adjudicative functions are important in guiding or controlling this process. In this category prepared and oral presentations were made by the Bureau of the Budget, General Accounting Office, Small Business Administration, and the Departments of Justice and Labor. The Renegotiation Board submitted a written statement. 4. To examine in more depth and detail selected functional or problem areas which cut across agency lines or are common to several or all of them. Here the subcommittee examined such problem areas as support service contracting, procedures for resolving contract disputes, and financial risks to the public and contractors arising from catastrophic accidents. 5. To afford an opportunity to any individual, group, or organization to come before the subcommittee and discuss procurement problems in connection with H.R. 474 from the standpoint of special knowledge and experience or economic interest. Among the organizations which endorsed H.R. 474 are the American Bar Association (Public) Contracts Law Section); National Institute of Governmental Purchasing, Inc.; Federal Executives Institute; American Institute of Architects; National Association of Wholesalers; National Tool Die and Precision Machinery Association; Aerospace Industries Association; and Electronic Industries Association. The subcommittee also heard individuals in Government, industry, academic and legal circles who have had many years of experience in dealing with Government pro curement matters. 2. Procurement of 2.75-Inch Aircraft Rocket Launchers. House Report No. 91-774, December 19, 1969, Eighteenth Report by the Committee on Government Operations. (a) Summary. This report represents a case study in sole-source procurement of an important military item. The situation for the Government was made more awkward and painful by the fact that it had to rely on the sole-source producer for major production after the company and several of its principals were indicted for fraud. Convictions were obtained on selected counts and the company has changed hands. It is no longer proscribed from doing business with the Government. In the meantime, efforts were made by the Government procuring agencies to develop alternative production sources. Since 1961, of 42 basic contracts for 2.75-inch rocket launchers, worth about $124 million, 28 contracts accounting for $102.3 million or 82 percent of the total dollar volume were channeled to this one company. For the most part this was done on seemingly routine justifications that there was no time to attract competitors or develop alternative production sources. Why and how did the Government get so heavily locked in? What should have been done to broaden the procurement base? What lessons are there for Government procurement as a whole? These are some of the questions the Military Operations Subcommittee pursued in its inquiry. (b) Benefits.-A subcommittee report, prepared in November 1968, made findings and recommendations which were submitted to the military departments for comment and action. The recommendations were pointed toward (1) more competition on a broader production base, (2) the Government taking steps to obtain control of technical data for competitive reprocurement, (3) improved procurement planning, (4) more careful justifications when exceptions are taken to advertise competitive bidding, (5) promoting standardization in designs, components, inventories, and service distribution methods, (6) closer scrutiny of sole-source contractors in terms of cost and performance data, (7) wider dissemination of audit information which indicates weak spots or irregularities in company accounts or practices. The military departments have submitted their responses, which indicate beneficial actions in several ways. Competitive sources have been canvassed and new producers brought into production. The Army estimates savings of $2,397,000 as a result of recent competitive pricing, although production difficulties are yet to be ironed out. Shortly before the subcommittee announced its 1968 hearings, the Department of Defense designated the Army as the single agency for procurement of launcher requirements for all military services. These responsibilities will commence at the beginning of the 1970 fiscal year. A configuration committee has been established in the interest of |