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Mr. STECK, from the Committee on Military Affairs, submitted the following

REPORT

To accompany S. 4017]

The Committee on Military Affairs, to which was referred the bill (S. 4017) to amend the act of May 29, 1928, pertaining to certain War Department contracts by repealing the expiration date of the act, having considered the same, report favorably thereon with the recommendation that it do pass.

The purpose of the bill is set forth in a letter from the Secretary of War, March 20, 1930, to the chairman of the Senate Committee on Military Affairs, which is made a part of this report and reads as follows:

Hon. DAVID A. REED,

Chairman Committee on Military Affairs,

WAR DEPARTMENT, Washington, March 20, 1930.

United States Senate.

DEAR SENATOR REED: There is inclosed the draft of a bill to amend the act of May 29, 1928 (45 Stat. 985), by repealing the expiration date, which the War Department presents for the consideration of the Congress with a view to its enactment into law.

The act of May 29, 1928 (45 Stat. 985), is a modification of Revised Statute 3744 (41 U. S. C., sec. 16), which requires that every contract made on behalf of the Government shall be reduced to writing and signed by the contracting parties with their names at the end thereof.

It should be noted specifically that no change in any of the laws requiring competition were contemplated in the original act and none are contemplated now. The act of May 29, 1928 (45 Stat. 985), simply varies the degree of formality required in the execution of contracts. The existing War Department regulations on this subject are as follows:

"The term 'formal contract' means an agreement reduced to writing in one instrument and signed by all the contracting parties at the end thereof. The term 'informal contract' means an agreement in any other form.

"Contracts for the procurement of materials, supplies, or services other than personal will be formal: (a) When the amount involved is more than $25,000; (b) When the delivery or performance time is more than 60 days and the amount involved is more than $500; (c) When otherwise required by law or when in the

opinion of the chief of branch or of the contracting officer such a contract is necessary to adequately protect the interest of the United States.

"In all other cases informal contracts are authorized, provided that oral bids in excess of $500 will be confirmed in writing."

The original bill was introduced in the House as H. R. 12352, Seventieth Congress, first session, without the proviso. It was reported out by the Military Affairs Committee May 5, 1928, Report No. 1552 (70th Cong., 1st sess.), and passed the House on May 16, 1928. A proviso was added by the Senate limiting the act until June 30, 1929. The conferees agreed to limit the act to June 30, 1930. In the Congressional Record for May 29, 1928, page 10748, the statement is made by the managers on the part of the House that the date of expiration was extended to June 30, 1930, to give the War Department time to give the subject further study and to recommend further legislation. The War Department had hoped that the bill introduced by Mr. Cramton to establish uniform requirements affecting Government contracts, H. R. 15713 (70th Cong., 2d sess.), would have become law by this time. This bill has been reintroduced as H. R. 5568, Seventy-first Congress, but it contains some provisions which have not been finally accepted by all concerned and its passage may be delayed. The indefinite extension of the act of May 29, 1928 is desired only until the uniform contract bill, H. R. 5568, is enacted, when the act of May 29, 1928 will be canceled automatically.

Property may now be acquired in three ways with respect to the formality of the agreement.

(a) In open market in the manner common among business men when the amount is not in excess of $500 (act June 12, 1906). There is no limit on the time of delivery. The offer may be in writing or may be oral. The acceptance by the Government is always in writing. No change is involved in this method. (b) By formal contract: Under War Department regulations now in effect formal contracts are required (1) if the amount involved exceeds $25,000 irrespective of time of delivery; (2) if the amount exceeds $500 and time of delivery exceeds 60 days; (3) in other cases where required by law or to protect the interests of the Government.

(c) By informal contract: Where the amount exceeds $500 but is less than $25,000 and performance is to be completed within 60 days, an informal contract is executed. This is accomplished by written bid and written acceptance. The bid is submitted after competition in accordance with existing laws. This is a valid contract and binding on both parties. The interests of the Government are fully protected.

The objection that the War Department has to the formal contract is based solely on the time, labor, and expense involved in its execution. A formal contract requires about 60 days to complete its accomplishment. In the meantime, supplies such as subsistence may have been consumed, the contractor can not be paid, and the discounts for prompt payment are lost. In some cases the number of items, number of consignees, and number of successful bidders are very large. In case a formal contract is executed, a complete copy of every paper pertaining to the contract must be made. Copies of contracts are furnished each consignee named thereon, the contractor, each paying finance officer, and each inspector, as well as the usual numbers for the returns office, General Accounting Office, and chief of branch concerned.

The informal contract involved issuing a purchase order to the successful bidder listing the items which he is to furnish and to whom to be furnished. The usual copies are furnished the paying officer and the consignee. The original written bid, together with a signed number of the purchase order, are filed with the General Accounting Office.

If the proposed amendment is not passed and approved prior to June 30, 1930, the War Department is faced with a tremendous increase in paper work and additional burdens will be placed on successful bidders who will not be paid promptly. It is believed the urgency of the proposed bill justifies its early favorable consideration.

Sincerely yours,

PATRICK J. HURLEY,

Secretary of War.

O

71ST CONGRESS 2d Session

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SENATE

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REPORT No. 487

EXPENDITURES FOR UPKEEP AND MAINTENANCE OF PROPERTY OF THE UNITED STATES UNDER CONTROL OF THE SECRETARY OF WAR

APRIL 21, 1930.-Ordered to be printed

Mr. STECK, from the Committee on Military Affairs, submitted the

following

REPORT

[To accompany S. 4108]

The Committee on Military Affairs, to which was referred the bill (S. 4108) to provide for reimbursement of appropriations for expenditures made for the upkeep and maintenance of property of the United States under the control of the Secretary of War, used or occupied under license, permit, or lease, having considered the same, report favorably thereon with the recommendation that it do pass.

The purpose of the bill is set forth in a letter from the Secretary of War to the Chairman of the Senate Committee on Military Affairs, dated March 29, 1930, which is made a part of this report and reads as follows:

Hon. DAVID A. REED,

WAR DEPARTMENT, Washington, March 29, 1930.

Chairman Committee on Military Affairs, United States Senate. DEAR SENATOR REED: There is inclosed the draft of a bill to provide for reimbursement of appropriations for expenditures made for the upkeep and maintenance of property of the United States under the control of the Secretary of War, used or occupied under license, permit, or lease, which the War Department presents for the consideration of the Congress with a view to its enactment into law.

There is no existing law upon the subject of the proposed legislation. The provisions of existing law which would be modified or directly affected are set forth in section 3617, Revised Statutes, and the pertinent provisions of Chapter II of the act of July 11, 1919 (41 Stat. 130), which reads as follows:

"The gross amount of all moneys received from whatever source for the use of the United States, except as otherwise provided in the next section, shall be paid by the officer or agent receiving the same into the Treasury, at as early a date as practicable, without any abatement or deduction on account of salary, fees, costs, charges, expenses, or claim of any description whatever. But nothing herein shall affect any provision relating to the revenues of the Post Office Department." (Sec. 3617, R. S.)

SR-71-2-VOL 2- -3

"Disposal of real property by sale or lease: That the President is hereby authorized, through the head of any executive department, upon terms and conditions considered advisable by him or such head of department, to sell or lease real property or any interest therein or appurtenant thereto acquired by the United States of America since April 6, 1917, for storage purposes for the use of the Army, which in the judgment of the President or the head of such department is no longer needed for use by the United States of America, and to execute and deliver in the name of the United States and in its behalf any and all contracts, conveyances, or other instruments necessary to effectuate any such sale or lease. "That all moneys received by the United States as the proceeds of any such sale or lease shall be deposited in the Treasury of the United States to the credit of 'Miscellaneous receipts' and a full report of the same shall be submitted annually to Congress. (Chap. II, 41 Stat. 130.)

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The effect of the proposed legislation and the cogent reasons for its enactment may be concisely stated as follows:

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A certain specific and agreed portion of the fixed rentals collected from commercial firms or individuals, who, as tenants, under the provisions of the act of July 28, 1892 (27 Stat. 321; 40 U. S. C., Sec. 303), occupy Government property under the control of the Secretary of War, may, under the legislation proposed, be credited to the particular appropriation made by Congress to the War Department for the operation, maintenance, and upkeep of such property rather than covered into the Treasury as "Miscellaneous receipts,' as now required by the provisions of section 3617, Revised Statutes. In cases where another department, bureau, or other establishment of the Government occupies Government property, in whole or in part, under the act of July 28, 1892 (supra), the proposed legislation will make it lawful for such government department or bureau to directly reimburse, in proportion to the extent of its occupancy, the particular appropriation involved in the operation and maintenance of the property occupied, rather than to deposit such proceeds in the Treasury as Miscellaneous receipts."

Under the provisions of the act of July 28, 1892 (27 Stat. 321), and of Chapter II of the act of July 11, 1919 (41 Stat. 129), and his general authority to grant revocable licenses, the Secretary of War, from time to time, leases or licenses to private interests, space in Government buildings under his control; for example, he leases, for temporary use by commercial firms and individuals, storage space, at general reserve or general intermediate depots (located at Boston, Brooklyn, New Orleans, and Chicago), which is in excess of that required by the War Department for current needs and war reserves, and of that which may be allotted by the War Department to other Government agencies, such as the United States Shipping Board. In such cases it has been the practice of the War Department either to make the cost of maintenance of the premises by the occupant a part of the consideration for granting the license or executing the lease; or, to provide that a stipulated amount, over and above the agreed compensation shall be paid by the occupant for the purpose of reimbursing the War Department for the occupant's proportionate share of the actual operating and maintenance cost of the building in which the space is occupied.

In cases where other departments or bureaus of the Government occupy space in, or wholly take over, War Department buildings, it has been the practice to include in the instrument granting the right to occupy, a provision that the department or bureau occupant shall bear its fair proportionate share of the operating and maintenance expenses.

In both instances the moneys received by the War Department for upkeep are covered into the Treasury and credited to the appropriation specifically provided for the maintenance, upkeep, and utilities pertaining to the buildings involved.

These practices have been disapproved by the Comptroller General, who stated in a decision to the Secretary of the Navy (8 Comp. Gen. 628, 631, June 3, 1929, A-26426):

* * *

"But as rapidly as possible, whenever and wherever current appropriations will permit, and not later than June 30. 1930, in all cases, unless express exception is authorized by law all proceeds from rentals of Government property authorized by law should be deposited and covered into the Treasury as miscellaneous receipts, and any item of upkeep, maintenance, or other item connected with the property should be charged to the appropriation specifically provided for that purpose.'

The adoption of this rule obviously precludes the application of any portion of the consideration or rentals in the class of cases cited above, to the cost of

upkeep of the property involved. It is also clear that after June 30, 1930, the Comptroller General will not sanction the advancement to the War Department from other Government departments, of funds for the maintenance and upkeep of space in War Department buildings occupied by such departments or bureaus. The action of the Comptroller General will further result in a reduction of about $122,000 in the funds annually available to the office of the Quartermaster General (beginning with the fiscal year 1931) for maintenance, upkeep, and utilities pertaining to the Government property involved. The War Department is, and probably will continued to be, charged with the responsibility for the maintenance and repair of the buildings involved in the leasing and licensing arrangements described above. Therefore unless other means are provided by Congress to replace the loss of use of those funds now received through the existing procedure of reimbursement, it seems inevitable that either the upkeep of these properties will suffer from rapid exhaustion of inadequate funds, or money urgently needed for other Army stations will have to be expended for their upkeep.

This legislation will be without any additional cost to the Government.

Sincerely yours,

F. TRUBEE DAVISON,
Acting Secretary of War.

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