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sanctity of present contracts, but not manner; that sectionalism shall not be a a worthy one. We have just set up a De. to permit any more such contracts.

future consideration in our procurement partment of Health, Education, and Welfare Mr. FERGUSON. Mr. President, will

program; and that small business shall not to cope with these problems, and I believe

be discriminated against by virtue of being with our cooperation Mrs. Hobby will prothe Senator yield?

located in sparsely settled areas where labor vide progressive leadership in this field. Mr. MAYBANK. That was my intensurveys are not conducted.

3. Under the Armed Services Procurement tion. I understand that contracts have

Effective February 7, 1952, the Office of Act of 1947, the report accompanying the act been made by the Government with some Defense Mobilization issued Defense Man sets forth language as follows: loyal oldtime American firms, but I do power Policy No. 4, which in the words of “Advertising continues to be the rule, ne. not appreciate some of them that were Mr. Arthur S. Flemming, authorizes a price gotiation the permissible exception. Advermade with people who went to distressed

differential of “5 percent, 10 percent, or tising will be used by the departments even

This

whatever seems to be appropriate.”. areas and took contracts away from other

when a negotiated contract is authorized if order amounting to agency legislation was in their best judgment it can be expected firms.

written by the Office of Defense Mobilization to give satisfactory results." Mr. CORDON. Mr. President, I wish

with the stated purpose of alleviating un 4. Three essential conditions will prevail to assure the Senator from South Caro- employment, but as the learned Senator from in the vast number of procurement cases, lina that I changed my vote because I Maine so ably stated in the hearings before according to the reports accompanying the wanted to be in a position to move for the Appropriations Committee, "and in the act, as follows: Definite specifications, several reconsideration, if necessary.

end does not have to pay attention to bids suitable sources of supply, and genuine price Mr. MAYBANK. I have stated what

but can go into the distress areas. It would competition.

cause a good many more distress areas, I It was the intention of Congress that if my intention was. would think."

these three conditions existed advertising Mr. FERGUSON. The Senator from

The purpose of this amendment is to would be used, and when one of the condiMichigan can see no other way to inter

clarify the existing conflict in provisions of tions is missing negotiation offers the satispret the vote except that none of the the Armed Services Procurement Act of 1947 factory method of purchasing. money can be used for this purpose. and Defense Manpower Policy No. 4 issued The Office of Defense Mobilization, That is clear under the amendment, by the Office of Defense Mobilization, and through the issuance of Defense Manpower namely, that it will prohibit the use of

this amendment simply restates the intent Policy No. 4, has permitted contracts to be

of Congress as set forth in the Armed Servthe money. It is a limitation. Of course

negotiated when all three conditions were ices Procurement Act of 1947. it will go to conference. If the sponsor

present contrary to the intent of Congress.

Under the Armed Services Procurement Act 5. In the Armed Services Procurement Act of the amendment will state on the

of 1947 generally all purchases and contracts of 1947, and the reports which accompanied floor and the Senator from Michigan

for supplies and services shall be made by same, the expressed purpose in making use expects to be a member of the confer advertising. There are 16 exceptions under of negotiation was to effect savings for the ence—that it was never his intention to which contracts may be negotiated. Section Government, to promote and intensify comhave it apply to contracts which are 2 (c) (1) of the Armed Services Procurement petition. Negotiation at the time of the already let and in operation, it can be Act has been misinterpreted and utilized to

passage of the act was understood to proceed taken care of.

carry out Defense Manpower Policy No. 4 in the following manner: Mr. MAYBANK. I would not make

contrary to congressional intent. Section 2 "Procurement by negotiation as practiced

(c) (1) provides for the negotiation of consuch a statement, because I do not know

by the services consists of first securing intracts "if determined to be necessary in formal quotations from as many sources as what the WPA people working down the public interest during the period of a

practicable, usually accompanied by breaktown under Flemming have done. They national emergency declared by the Presi downs of elements of costs. Separate negomay have made contracts in Arizona for dent or by the Congress.”

tiations then usually begin with the lower 2 or 3 years. If it is a reasonable con It shall be my purpose at this time to

bidders, in order to reduce the price by tract, made for a reasonable time, cer

analyze the provisions of the Armed Services eliminating unnecessary or un justified

Procurement Act of 1947 and Defense Mantainly I would state so. It was never

charges. When the best possible agreement power Policy No. 4, in order to set forth the my intention, as the distinguished for

has been reached, an appropriate contract is conflicting provisions.

awarded the successful firm. Experience has mer judge and chairman of the subcom 1. Under Defense Manpower Policy No. 4

shown that by careful negotiation and by mittee knows, to violate a Government a price differential of 5 percent, 10 percent, drafting a suitable contract it is frequently contract. But I do not know what those or such amount as may seem appropriate

possible to secure substantial savings for the wild people under Flemming have done. may be paid by the Government in areas of

Government. Negotiation, properly emThey are totally wild and totally irreunemployment.

ployed, can promote and intensify compe

The Armed Services Procurement Act of sponsible, as the Senator from Michigan

tition." 1947 makes no provision for a price differknows.

Contracts have, as a matter of practice, ential in areas of unemployment. The House Mr. FERGUSON. I wanted to know

been awarded in a manner which is conand Senate reports which accompanied the what the feeling was of the Senator from Armed Services Procurement Act of 1947 set

tray to the procedure outlined, in that

there has been no effort to effect savings South Carolina.

forth that the act was expected to provide
(a) that the Government as a purchaser will

for the Government, to negotiate first with Mr. MAYBANK. My feeling is that a

the lowest bidder, or to intensify competition. Government contract is a Government receive the best bargain available, and (b)

6. Several specific examples were mencontract. As the Senator from Michsuppliers in a position to furnish the Gov

tioned in Senate Report 571, accompanying, ernment's requirements will have a fair and igan and the Senator from Massachuequal opportunity to compete for a share

the act, as to the manner in which the pubsetts know, we have considered certain

lic interest would be served in negotiated in the Government's business. Government contracts in the independ Under Defense Manpower Policy No. 4, the

contracts, as follows: After a high bid was ent offices appropriation bill, which will Government does not receive the best bargain negotiations were then begun to purchase

received for certain refrigeration equipment, be before us again tomorrow morning, available and suppliers do not have an equal

the entire requirements piecemeal, which rein connection with housing; and my

opportunity to compete, and is in direct con-
flict with the Armed Services Procurement

sulted in a saving of $151,000, or 46 perfeeling is that where there is a contract,

cent. In the second case a bid was let it should be lived up to as a contract. Act.

for penicillin equipment, and when a high However, when some second-class bu

2. The negotiation of contracts when nec

bid was received negotiation was started essary in the public interest under the Armed reaucrat makes a contract, I am against

which resulted in a saving of $44,670, or 43 Services Procurement Act means the interest it.

percent. In a third case there was only of the Government, which is borne out in re

one bidder for certain cable desired, and a Mr. President, I ask unanimous con ports accompanying the act in language as negotiation was carried out with the same sent to have placed in the RECORD a state- follows:

bidder resulting in a saving of 35 percent. ment which I have prepared on the "However, your committee recognizes a In every known reference to negotiation amendment.

careful administration is necessary for this in the reports, when negotiation was being There being no objection, the state

bill to be workable in the best interests of included in the act, the purpose for which

the Government. It therefore expects strict negotiation was being recommended and inment was ordered to be printed in the

supervision of its application by the respon cluded was the direct savings to be effected RECORD, as follows:

sible authorities in the various departments.” for the Government. STATEMENT BY SENATOR MAYBANK

The Office of Defense Mobilization inter The Office of Defense Mobilization has The adoption of this amendment will once prets public interest to mean savings in un never to my knowledge indicated or recagain establish the principle that legisla employment compensation, tax losses, idle ommended that negotiation be used to effect *tion shall be written in the Congress of the machines, impact on communities, lost sales, savings for the Government, but instead United States, and not by order and regula and relief payments.

ODM has written language into Defense tion; it will restate the principle that all It was never intended that procurement Manpower Policy No. 4 which, according to persons dealing with the Government will legislation was to be used to solve every con the admission of the Director, authorizes a be treated in a fair, equal, and impartial ceivable problem, even though the cause be higher price than would be obtainable under

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competitive bidding of as much as 5 percent, In making further reference to the Armed Senator MAYBANK. HOw much would a con10 percent, or whatever seems appropriate. Services Procurement Act, the Comptroller tract average?

In using negotiation for the purpose of General pointed out that section 3 of the General HOLLIS. I beg your pardon? solving unemployment problems; preventing act requires that award be made to a re Senator MAYBANK. What would the avertax losses, and idle machines, preventing lost sponsible bidder. The Comptroller General age contract amount to in dollars that costs sales and relief payments, the Office of De then made reference to section 2 (c) (1) of $557 to carry it through? fense Mobilization has not only misinter the Armed Services Procurement Act of 1947, General HOLLIS. I do not have figures with preted the Armed Services Procurement Act which contains the following language:

me. of 1947 and issued an order and notification “On t'e other hand, section 2 (c) (1) of Senator MAYBANK. Would you supply them contrary thereto, but has concerned itself the Armed Services Procurement Act of 1947 for the record at your convenience? with the functions of other departments, authorizes the negotiation of contracts, General HOLLIS. I would, sir. agencies, and committees and exceeded its without advertising, when determined by (The following was later supplied for the scope of authority.

ühe agency head to be necessary in the pub record by General Hollis :) 7. Certainly no group has given more care lic interest during the period of a national “The value of all contracts awarded by ful consideration to the problems of small emergency declared by the President. Such ASTAPA has averaged $189,000.” business, or is more qualified to write legis a national emergency was proclaimed by the Senator MAYBANK. What about the time lation on that matter, than this body. And President on December 16, 1950. Despite delay? in writing the Armed Services Procurement such authority, it would not normally ap General HOLLIS. It depends on circum· Act of 1947, it was the declared policy of pear to be in the public interest for the stances, Senator. Our experience has been Congress that a fair proportion of the total military departments to make awards of con to date, we go out with a formal advertisepurchases and contracts for supplies and tracts to a firm or group of firms when it is ment and make a procurement usually for services for the Government shall be placed known at the time that the services or sup the major part of the procurement which is with small-business concerns.

plies are obtainable elsewhere at a lower required to establish prices. Following that, The Congress made no distinction between price."

we attempted to negotiate a certain quantity small businesses in one section of the coun Section 8 of the Defense Manpower Policy under these ground rules and we are sometry rather than another, but the action of the No. 4 did recognize that the operation of times successful, sometimes not. Office of Defense Mobilization in relation to this order could have an adverse effect on The additional delay involved in that nesmall business has amounted to legislation an entire industry, and a method of proce gotiated procurement is perhaps in the order with discrimination. In making labor sur dure was provided for relief in such in of 30 to 45 days. Not infrequently we have veys of labor-surplus areas, “the smallest stances. Section 8 reads as follows:

found that the quantities which we have area that is considered is defined as one "When the application of this policy would thus set aside are not subscribed by induswhich is not primarily a trade or service have a major effect on the operation of an try and it now becomes necessary for us to center and which has an estimated area labor entire industry, appropriate recommenda go into the market again with a second force of at least 15,000 and estimated non tions shall be made to the Director relative formal procurement or third formal proagricultural employment of at least 8,000.” to that industry in lieu of recommendations curement. This procedure leaves out those small busi relative to specific geographical areas. In Senator MAYBANK. Whereas if you had this nesses in sparsely settled areas, whereas it such cases, after notice to and hearing of to start with, you would have gotten it? was the intent of Congress to assist them. interested parties, consideration will be given General HOLLIS. We would have gotten it

to a separate certification applying to the more rapidly.
entire industry."

Senator MAYBANK. It costs a lot of money BACKGROUND ON MAYBANK AMENDMENT TO

Pursuant to this language of section 8 of to handle this business; doesn't it? DEFENSE DEPARTMENT APPROPRIATION BILL

DMP 4, Mr. Arthur S. Flemming, then Chair General HOLLIS. Yes, sir. Procurement policies established under an

man of the Surplus Manpower Committee, Executive order issued by President Truman and who is now Director of the Office of De

Mr. SALTONSTALL. Mr. President, are placing a premium on absentee ownerfense Mobilization, convened a panel and

a parliamentary inquiry. ship, inefficiency, and factory decay in cer

directed the members to hold a hearing and The VICE PRESIDENT. The Senator tain geographic areas at the expense of more

submit "your findings, conclusions, and rec from Massachusetts will state it. efficient and productive modern plants in ommendations."

Mr. SALTONSTALL. Who has the other sections of the country.

The recommendations submitted by Mr. floor? On January 17, 1951, President Truman

Flemming, and approved by Dr. Steelman, issued Executive Order No. 10193, which is said, in part (with reference to the textile

The VICE PRESIDENT. The Senator cited as the authority for procurement agen industry):

from Massachusetts has the floor. cies to channel Government orders into

"That no preference be given in the place Mr. SALTONSTALL. I merely wish labor-surplus areas at prices other than those ment of such contracts to any areas or par to say that I understand, as the Senator determined by advertised bids. The Execu ticular cities within areas with respect to from Michigan understands, that it is a tive order began: this industry.

limitation on the use of the funds. "By virtue of the authority vested in me "That no provision be made for payment by the Constitution and statutes, including

Otherwise it would be the law. I simply of any price differential.” the Defense Production Act of 1950, and as

The panel further concluded that the rec

state it for the RECORD at this time. My President of the United States and as Comommendations of the panel are intended to

principal purpose in rising is to ask mander in Chief of the Armed Forces, it is further the public interest without undue

unanimous consent to place in the REChereby ordered as follows."

cost to the public or unfair discrimination ORD, at the conclusion of my remarks, a Following that Executive order, Defense to any part of an industry.

letter from the Office of Defense MobiliMobilizer Charles Wilson issued Defense With respect to costs of this plan and reManpower Policy No. 4 to become effective on sulting delays in procurement, the following Hampshire (Mr. BRIDGES] by Mr. Flem

zation, written to the Senator from New February 7, 1952.

excerpt is taken from Progress Report No. 26, In a letter dated January 14, 1952, from hearing before the Joint Committee on De

ming, which I intended to read into the Lindsay Warren, Comptroller General of the fense Production, May 4, 1953.

RECORD. United States, to the Director of the Office Senator MAYBANK. It does cost consider The VICE PRESIDENT. Is there obof Defense Mobilization, it is clearly indicated able money, doesn't it?

jection? that there is nothing in the Defense Produc General HOLLIS," I am about to come to

There being no objection, the letter tion Act of 1950, as amended, which author that. izes such a negotiation of Government con As a generality, since the weighted aver

was ordered to be printed in the RECORD, tracts contemplated in Defense Manpower age price of formally advertised awards is

as follows: Policy No. 4. The exact language referred used as the target for negotiated contracts, EXECUTIVE OFFICE OF THE PRESIDENT, to is as follows: and I might relate that particularly to the

OFFICE OF DEFENSE MOBILIZATION, "As your letter apparently recognizes, 80-hour rule of which we are speaking, there

Washington, July 21, 1953. there is nothing in the Defense Production is not, as a rule, any additional cost to the Hon. STYLES BRIDGES, Act of 1950, as amended, which of itself au Government involved because cases are ex United States Senate, thorizes generally the negotiation of Goy ceptional, where we would be able to obtain

Washington, D. C. ernment contracts or a disregard of normal our entire requirements at the lowest price DEAR SENATOR BRIDGES: I am informed that procurement procedures."

awarded pursuant to formal advertising. the Senate Committee on Appropriations has The language of the Defense Production There are, however, certain administrative

amended section 643 of the Department of Act of 1950 which was claimed to be the costs involved. Cost figures for ASTAPA in Defense Appropriations Act (H. R. 5969) as authority for DMP No. 4 has now been re dicate that the average cost for awarding follows: pealed.

and for administering to its conclusion, a "Provided further, That none of the funds Mr. Warren's letter continues: typical contract amounts to $557.

appropriated by this act shall be available "In its simplest form, therefore, the ques

for expenditure under any contract without tion you present is merely whether the 1 Brig. Gen. Robert P. Hollis, Chief of regard to the provisions of law relating to Armed Services Procurement Act of 1947 au agency staff, Armed Services Textile and Ap the making, performance, amendment, and thorizes the procedure involved." parel Procurement Agency.

modification of contracts, for the purpose

of correcting or preventing economic dislo The Plant Site Board and its successor, agencies to applications for loans which cations.”

Facility Clearance Board, took into account, originate where unemployment is serious; The Department of Defense, through its among other things, the existence of readily. (2) Defense Department consideration of procurement, construction, and other expen available labor supply before selecting the labor market conditions in scheduling civilditures, has a very significant impact on the specific location of any major project. Other ian employment expansions and cutbacks at American economy. During and since World factors taken into consideration were the military establishments (see attachment II); War II, the Government has issued various need for additional facilities, availability of and (3) the extension of preferential conpolicies designed to assure that the Federal power, transportation, etc.

sideration by the HHFA, the Public Roads procurement agencies would take cognizance Following War Production Board Directive Administration, the Civil Aeronautics Adof manpower supply factors in the distribu No. 2 of March 1942, which established poli

ministration, and other public-works agen. tion of contracts. These policies have sought cies and procedures governing the placement cies to project proposals from areas of unto discourage placing additional contracts of war contracts by negotiation, specific rec employment. or facilities in tight labor market areas and ognition was given to manpower as a factor EARLY STAGES OF DEFENSE MOBILIZATION, to encourage naking the best use of areas in awarding Government procurement con

1950-51 where labor skills and manufacturing fa tracts. Amendments to the directive en

Shortly after the Korean invasion, the cilities are in surplus supply. Enclosed is a joined procurement agencies to avoid con

Government acted quickly to avoid delays in statement summarizing various past and tracting for the production of items or ma

the delivery of defense materials wiiich might present policies in this connection.

terials in communities or areas in which One of the policies which would be pro labor shortages are known to exist, when

result from unrestricted placement of de

fense contracts in areas of labor shortage, hibited by the committee amendment is ever it is practical to procure the needed

while other areas with idle facilities and surDefense Manpower Policy No. 4, which was items or materials elsewhere. Basic fac

plus manpower were still available. issued by my predecessor in this office, the tors to be considered in contract awards were Honorable. Charles E. Wilson, on February

Secretary of Defense Marshall, on Decem(a) speed of delivery, (b) use of existing

ber 18, 1950, issued a memorandum to the 7, 1952. This policy makes possible the facility, and (c) manpower. At the same

Secretaries of the military departments, enplacement of negotiated contracts in areas time, the War Production Board encouraged

titled "Broadening the Industrial Base of of substantial labor surplus by permitting prime contractors to follow the intent of the

Procurement Programs.” (See attachment firms located there to match the best price directive in the letting of subcontracts.

III.) This memorandum directed the miliobtainable elsewhere. Since March 1952, Pursuant to the amended Directive No. 2,

tary departments to pay particular attenmore than $52 million of Defense Departe the War Manpower Commission certified to

tion to a number of factors which should be ment procurement has been awarded to these procurement agencies three groups of labor

considered in procurement, including: "i. areas as a direct result of the policy. This market areas. Group I consisted of labor is a very small portion of the Defense De market areas in which labor shortages ex

The availability of manpower in distressed partment's total procurement over this pe

employment areas or in areas of manpower isted and in which further supply contracts

shortages." riod of time. It has, however, been of real should not be awarded, when the facilities assistance to these communities. This as for meeting the requirements of such con

On the recommendation of the National sistance to areas of substantial labor sur tracts were available in other areas. Group

Security Council, the Secretaries of Treasury

and Labor, and the Director of Defense Moplus costs the Government nothing in prices II areas consisted of labor market areas in

bilization, the President, on January 17, 1951, of materials procured. Although this policy which labor shortages were anticipated. Supdoes entail some additional administrative ply contracts which had a maximum delivery

issued the National Manpower Mobilization costs, we believe they are justified by the date of more than 6 months were not to be

Policy. Each Department was directed inaccomplishments of the policy in making awarded in these areas when facilities were

dividually to implement the policy and be better use of manpower and production re available in other communities for meeting

responsible for its supervision. Paragraph sources and in assisting distressed commu the requirements of such contracts. Group

7 (i) reads as follows: nities. III areas consisted of areas in which labor

"Production will be scheduled, materials Critics of defense manpower policy No. 4 surpluses existed and no shortages were an

allocated, and procurement distributed with have pointed out that this policy authorizes ticipated. Special effort was to be made to

careful consideration of available manpower. the payment of price differentials. I feel award contracts in these latter areas in order

Whenever feasible, from an economic and very strongly that the Government should to utilize manpower resources more effec

security standpoint, production facilities,

contracts, and significant subcontracts will procure goods and services at the lowest tively. prices obtainable. Throughout the existence

be located at the sources of labor supply in

1949 "INVENTORY RECESSION” EXPERIENCE of defense manpower policy No. 4 price dif

preference to moving the labor supply." ferentials have never been authorized or

With the rise of sizable unemployment at This policy of "bringing work to the workused. Because of my strong opposition to

the end of 1948 and early 1949, the Execu er” was implemented by the Department of their use, and to assure that defense man

tive Office of the President-specifically at Defense in March 1951. power policy No. 4 will not be utilized in the instructions of Mr. John R. Steelman

DEFENSE MANPOWER POLICY NO. 1 such a manner that the Government will provided that Federal programs of direct achave to pay more for the goods it procures tion or assistance to localities be timed and

On August 2, 1951, Director of Defense than would otherwise be the case, I have channeled so as to concentrate upon areas

Mobilization Wilson issued Defense Manasked for the preparation of an amendment where unemployment was heavy without

power Policy No. 1, entitled "Implementato defense manpower policy No. 4 prohibitsacrifice of general national objectives. A

tion of National Manpower Mobilization Poling the use of price differentials, and I plan

wide variety of Federal activities were influ icy With Respect to Procurement and Proto issue this amendment shortly. enced by this directive--procurement of

duction Scheduling." This policy expanded We in the Office of Defense Mobilization equipment and supplies, construction of

on paragraph 7i of the National Manpower

Mobilization Policy with specific directives have continually endeavored to assure that public buildings, roads, and other facilities,

the public housing program, business loans, the available manpower and production re

to the various departments: sources of the Nation are utilized with maxi

locating sites, and scheduling employment Procurement. Procurement agencies were mum efficiency. I consider it essential that

levels for Government financed installations directed to issue instructions to procurethe needed administrative flexibility be reand facilities.

ment officers calling attention to the need tained to enable continuance of policies,

Several changes were made in procedures for considering labor supply in placing orsuch as defense manpower policy No. 4,

and policies for Federal procurement. A ders. An example of such instructions is designed to achieve this objective.

system was installed which gave all firms the following paragraph from the Defense We hope, therefore, that the proposed

an opportunity to bid on all Government Department's Directive 250.03–10 of Octoamendment to section 643 of H. R. 5969 will

contracts. In addition to local efforts to ex ber 19, 1951: be deleted.

pand employment, special assistance was "Instructions to procurement officers Sincerely yours,

given to manufacturers in areas of heavy should emphasize the increasing need for ARTHUR S. FLEMMING,

unemployment, by providing information giving serious consideration to the adequacy Director. and suggesting new products. The Comp of the local labor supply in contract place

troller General ruled that in the event of tie ments and in planning delivery schedules. SUMMARY OF EXECUTIVE BRANCH POLICIES RE

low bids on Government contracts, the award To the extent possible, procurement should LATING TO AREA LABOR SUPPLY IN CONNEC

could be made to a firm located in an area be avoided in labor market areas where manTION WITH PROCUREMENT, ALLOCATIONS, AND

of serious unemployment. In some in power is in short supply or in approximate PLANT LOCATION

stances, the Government undertook acceler balance (areas classified in group I or group

ated procurement programs in order to pro- II by the U. S. Department of Labor); and WORLD WAR II EXPERIENCE

vide employment in slack seasons. At this should be placed in labor market areas hayThe importance of balanced geographic same time, procurement agencies also recog ing surplus manpower (areas classified in distribution of defense production and man. nized the principles of breaking up large group III or IV)." power impacts was recognized early in the orders and accepting bids on portions of With respect to labor shortages, Defense World War II. Throughout World War II, the whole so that smaller manufacturers required procurement officers to obtain dethe allocation of Government procurement could bid more readily.

tailed manpower information whenever a contracts and the location of defense-plant Other Government actions during this pe proposed purchase would result in the emfacilities were interrelated with the labor- riod were: (1) the extension of preferential ployment of a significant number of addisupply considerations.

consideration by RFC and other lending tional workers in an area of labor shortage.

A central monitoring system was established manpower policy No. 4, the task force worked number of planes we can produce within to assure compliance.

closely with the surplus manpower commit the next few months. I wish I could beDMP 1 also directed procurement agencies tee. The task force was abolished around

lieve or be convinced that the security of to encourage and assist prime contractors May 1952.

the United States is a matter of so short in following its principles in the selection

DEFENSE MANPOWER POLICY NO. 4 of subcontractors. Defense Department Di

a time. rective 250.03–10 required procurement off

DMP 4 was issued by Director of Defense I do not believe that our security or cers to do this and specified that small Mobilization Wilson on February 7, 1952 (see defense measures concern us only for the business specialists should be utilized in

attachment IV). It provided for negotiated next few months or during the remainder this program. In 1951 and 1952, the National procurement from concerns in surplus labor Production Authority cooperated with the areas (group IV). Although the policy au

of the fiscal year. The problems we now Defense Department in a program to spread thorized the use of price differentials to

face will be with us for a number of defense contracts and subcontracts to more effectuate its purposes, the agencies con

years, unfortunately, and there is no way, than 3,000 manufacturers who were most cerned agreed that such payments were un in my opinion, in which we can avoid seriously affected by raw materials allot- necessary and undesirable. Accordingly all the responsibility of providing adequately ments and who probably would have been ODM notifications under this policy have

against the great danger which threatforced to lay off workers. One technique specifically stated that no price differential

ens. used in various cities was the "industry as was considered necessary and implementing

Mr. President, planes ordered today or sistance clinic,” at which procurement offi- instructions of the procurement agencies

designed today will not be in service cers were brought together with potential have not authorized their use.

This policy, as implemented, differs from prime contractors, and prime contractors

for at least 2 or 3 years. Atomic weapwith potential subcontractors.

previous policies which encouraged negotia ons will probably take even a longer time Expansion of Government facilities: DMP tion of contracts in surplus labor areas, by to construct. The officers and men re1 directed agencies operating Government setting up specific machinery whereby firms

quired by our Air Force and by our other facilities and installations to take area labor in surplus labor areas are allowed to match

branches of military service will take supply into consideration when making de the best price otherwise obtainable on ne

many months and great patience to cisions regarding the location, expansion, or gotiated contracts. A variant of this is the contraction of such facilities. Both the

train. set-aside method, adapted from small busiAtomic Energy Commission and the Depart ness procedures, whereby portions of pro

I have been impressed by the fact that ment of Defense have frequently consulted curements are specifically set-aside for ne today we have been discussing a reducwith the Department of Labor before initiat gotiation with surplus labor area firms on tion of a billion dollars in the appropriaing new facility construction or expansion a price-matching basis.

tions for the defense of our Nation. The to determine in which areas ample labor DMP 4 applies only to the procurement ac

whole question is whether we will insupplies could most likely be found.

tivities of the Department of Defense and the
General Services Administration. At pres-

crease our appropriations by a billion Tax amortization applications: DMP 1 directed agencies responsible for approving ent there are 26 areas of substantial labor

dollars or let the appropriation stand as applications for accelerated tax amortization surplus eligible for contract preference, con

proposed by the committee. That is not and business expansion loans to consult with stituting about 312 percent of the Nation's really an accurate statement. We are the Department of Labor regarding man nonagricultural labor force. Twenty-eight not dealing with a cut of $1 billion. We power considerations in such applications, so areas have been dropped from contract pref are dealing with a cut of many billions as to prevent the dislocations resulting from erence due to improved employment levels. of dollars. I wish to point out the Deexpansions in present or potential labor Seven Group IV areas were not approved for partment of Defense appropriations for shortage situations. Applications for expan contract preference due to lack of facilities. sion in labor surplus areas were given prior In the period from March 20, 1952 through

the fiscal year 1953 were approximately ity attention. On February 3, 1952, a Facil April 30, 1953, preferential contracts

$47,185,000,000. The amount recomities Review Board was established in the amounting to $52,425,749 were awarded by

mended by the Senate Appropriations Defense Production Administration to re the Department of Defense. The 26 areas

Committee for the appropriations for view proposed construction or expansion remaining under the policy have received the Department of Defense for the year projects sponsored by the Department of preferential contracts amounting to $12, 1954 is approximately $34,511,000,000—a Defense and the Atomic Energy Commission 842,385. The General Services Administra

cut of approximately $12,673,000,000. and recommend the substitution of existing tion has made preferential avards amountfacilities when available.

The appropriations for the fiscal year ing to approximately $200,000 during this Priorities and allocations: DMP 1 direct. period.

1953 for the Department of the Air Force ed agencies issuing priorities and allocations DMP 4 also provides for special assist

amounted to $21,073,000,000. This year to consider the employment effects of their ance to industries rather than areas. The

the Senate Appropriations Committee orders affecting civilian production levels textile, apparel, and shipbuilding indus has recommended as the appropriations and to consider appeals from materials con tries have been exempted from the area for the Department of the Air Force, servation orders when based on the need to preference application of the policy and maintain a work force for defense production special recommendations have been made to

$11,247,000,000, or a cut of approximately or on community hardship resulting from assist them.

$9,825,000,000. unemployment.

Furthermore, let me point out that The National Production Authority estab

The VICE PRESIDENT. The bill is while the figures I have cited show a lished reserves of materials to assist various open to further amendment.

comparison between the last fiscal year hardship cases. Special consideration was Mr. LEHMAN.

President, I appropriations and the appropriations given to increasing original allotments in the have listened to a great many reports now recommended for the fiscal year case of entire industries, such as the con

by leaders of our Nation with regard to struction industry, which were faced with

1954 even the budget estimates for the severe unemployment. Supplemental allot

the international situation. They have fiscal year 1954 are proposed to be ments were granted to firms in areas of sub

appeared before committees of which I greatly slashed. stantial unemployment where further lay

am a member. They have on other oc In the case of the Air Force, they would offs would result in community hardship. casions made public statements.

be slashed by almost $5 billion. In this respect group IV classification of an Mr. President, I do not recall of one Mr. President, no one can tell me that area by the Department of Labor was con- responsible official of our country testi we shall be able to purchase as many sidered prima facie evidence of community fying or expressing the opinion that the airplanes and be able to have as much hardship.

threat to the security of our country is opportunity to train pilots with an apDEFENSE DISTRESSED AREAS TASK FORCE less today than it was 3 years ago, 2 propriation of $5 billion less than the one In December 1951 an interagency defense

years ago, 1 year ago, or 6 months ago. recommended by the Bureau of the distressed areas task force was formed under

On the other hand, many officials and Budget, and more than $9 billion less the chairmanship of the Defense Production Administration to assist areas of heavy un

high military officers have testified to than the appropriation made for the employment, particularly automobile-pro

the contrary. They have emphasized same purpose last year. Such a reducduction centers. In January the task force

the fact that we are under an acute tion in the appropriation does not make visited Detroit and nearby cities for confer

threat, and that our security will be sense to me. The necessary work cannot ences with industry and labor leaders and jeopardized unless we take the necessary be done under such a reduction in the Government officials. The Governor of steps to defend ourselves.

appropriation. I believe that if we agree Michigan created an emergency defense con

Mr. President, I listened to the debate to make such a reduction in the approtracts commission, made up of industry, labor, and State government representatives.

throughout the day, and I gathered the priation, we shall be acting in a manner The two groups cooperated to encourage the

impression that some of my colleagues which will jeopardize the security of the placing of larger numbers of defense con

believe our defense is a matter of the Nation. tracts and subcontracts in these distressed next few months. I wish I could be The recommended cut of $9 billion areas. Following the issuance of defense lieve it. I know there is a limit to the from the appropriation made for this

Mr.

purpose for the fiscal year 1953 is re- to continue, we may jeopardize our whole His deputy is Maj. Gen. James McCorflected very largely in the appropriation national philosophy regarding security mack, Jr., a Rhodes scholar, who holds a for the procurement of airplanes and under arms.

master's degree from the Massachusetts materiel, which are directly related to It is bad enough to reduce the pro- Institute of Technology. our defense.

duction quantity of our airpower. This These are the so-called hacks who diOf course, Mr. President, I shall vote is a calculated risk, and, under present rect the Air Force effort in research and for this appropriation bill, for I have conditions, a most dangerous and unwar development. no choice. The Senate cannot possibly ranted one. It can be even more danger The spokesmen in this campaign for afford to end this session without pass- ous, however, to cut back the program

ous, however, to cut back the program less airpower like to portray the Air Force ing an appropriation bill for the Depart- responsible for the quality of our air leader as a flyboy, rich in combat experiment of Defense. But I wish to empha- weapons.

ence but lacking in other attributes of size with all the force at my command This defense budget reduces Air Force

his trade. It is worth noting, therefore, that I shall vote for this greatly emascu- strength in quality as well as quantity that several leaders of the Air Research lated appropriation bill with great re- That is compounding an error beyond the

and Development Command, although luctance and with very great fear for point of a calculated risk.

they wear the two stars of a major genthe future.

It may not be practical or necessary to

eral, wear no wings over their left I believe that the appropriations now match a potential enemy in numbers of

pockets. being recommended, and which, except aircraft and guided missiles if we more

General McCormack is one of these for some minor changes, undoubtedly than match him in the quality of our

men. Another nonflying leader of this will be enacted by the Congress, are equipment. An active, progressive, and

command is Maj. Gen. Raymond C. completely inadequate, and may, and I well-financed research and development Maude, the top

graduate of his

class at fear probably will, seriously jeopardize program, therefore, can be a most worthy West Point, who holds a master's degree the national security. and desirable investment.

from Yale University. General Maude Mr. President, I do not delude myself Accordingly, it is surprising that this

heads the Air Force Research Center at into believing that the remarks I make so-called businessman's administration,

Cambridge, Mass., the world's leading this evening will change the decision of with its avowed interest in economy,

geophysics research laboratory. the branch of Congress in which I have cannot see the long-range economic

Still another nonflying leader is Maj. the honor to serve, but I do not believe value in an adequate Air Force research I would be true to my responsibilities as

Gen. William L. Richardson, a pioneer in and development effort. Such a pro

guided-missile research who commands a Member of the Senate and my regram should receive full support from

the Air Force Missile Test Center in Florsponsibilities as a United States citizen the Congress.

ida. All these men hold these responsible if I did not take this opportunity to pro In light of this, I am shocked and dis

positions solely by virtue of their scientest in a very strong way against the heartened at the manner in which some

tific and administrative abilities, rather proposed cuts, which I think are un- have chosen to represent the Air Force

than their proficiencies in the cockpit. justified and unjustifiable, and which I research and development. believe will place the United States un

It has been claimed that the Air Force

Civilian leadership in Air Force re

search and development is vested in Mr. der great threat and in great jeopardy has "a lot of hacks attempting to do rein the years to come. search and development, who have no

Trevor Gardner, the Special Assistant to

the Secretary of the Air Force for ReMr. NEELY. In my opinion, the ob- business in those departments and ac

search and Development. Mr. Gardner servations just made by the able Sena- tivities.”

holds a master's degree from the Unitor from New York are entitled to un

Let us have the facts, Mr. President.

versity of Southern California. In addiusual weight, because I think it is gen- For one thing, let us take a closer look

tion to being an accomplished engineer, erally understood that he is the heaviest at some of the so-called “hacks" who are

he is the founder of a successful research taxpayer in the Senate. handling the Air Force research and de

company. Mr. HILL. Mr. President, I am con- velopment program. cerned about the inadequacies of this de

The long-range policies for this re

Mr. Gardner applies the businessman's

approach to this important segment of fense budget in the field of research and search and development were established

the Air Force effort. deevlopment for our Air Force and the by, and are reviewed periodically by, the statements made incident thereto. Scientific Advisory Board of the Air

As Special Assistant to the Air Force Force. In commenting on the testimony of

This organization comprises 75

Chief of Staff for Technical Matters, and the Secretary of Defense before the Seneminent scientists, who serve as advisers

the Air Force's troubleshooter on reIts

search and development, we have a genate subcommittee, the Washington Post to the Air Force Chief of Staff.

chairman, who works full time for the recently editorialized as follows:

tleman by the name of Gen. Jimmy DooAir Force, is Dr. Theodore van Karman,

little who earned a doctor's degree at the His seeming distain for pure research imone of the world's most renowned aero

Massachusetts Institute of Technology plied a curious anti-intellectualism most unbecoming to his position.

nautical scientists. Its vice chairman is long before he bombed Tokyo as one of Dr. Mervin Kelly, president of Bell Tele

our greatest combat leaders; and who is But Dr. Hugh L. Dryden, director of phone Laboratories, and perhaps the Na

a successful business executive as well. the National Advisory Committee for tion's leading industrial scientist. Its These, then, are some of the “hacks” Aeronautics, has said recently that 97 members include university presidents,

responsible for research and developpercent of the work is development, and noted research directors, leading nuclear

ment programs of the Air Force. Now 3 percent is pure research.

physicists, and one holder of the Nobel for those who discredit and abuse the Many of our most vital defense pro- Prize, the world's highest award for

recommendations of the so-called hacks. jects—including the atomic bomb, the scientific achievement.

Mr. HENDRICKSON. Mr. President, jet engine, the swept-back wing design They are the ones who are called hacks will the Senator yield for a question? have had their roots in the basic research at the top of the Air Force -esearch and Mr. HILL. I told the distinguished of foreign scientists, including those of development structure.

chairman of the subcommittee that I Russia. This represents a serious gap Several years ago the Air Force sepa would seek to move on with this speech. in our security structure.

rated its research and development ac I do not like to be discourteous to my I might have disregarded the Secre- tivities at the operating level and formed

friend from New Jersey, but, if I may, I tary's position on pure research as a slip the Air Research and Development Com should like to proceed. But if the Senof the tongue, were it not for other dis- mand. This is the agency primarily re

ator wants me to yield for a question, I turbing evidence. In a meeting with in- sponsible for the quality of our air weap

will yield. dustrial leaders not many weeks ago, Mr. ons. Its commander is Maj. Gen. Donald Mr. HENDRICKSON. I wondered Wilson repeatedly referred to the Air L. Putt, a graduate of Carnegie Tech, where the distinguished Senator got the Force research and development program who has been cited by this university for term "hacks.” I have not heard that as "boondoggling."

his scientific achievements in the Air word used heretofore in any of the deBut there is more at stake than just Force, who holds a master's degree from

bates. the dollars Mr. Wilson would pare from the California Institute of Technology, Mr. HILL. I may say to my friend the Air Force budget. If this approach and who is universally respected as a that the term even appeared in the RECto research and development is permitted military scientist.

ORD, in another legislative body. If the

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