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violation of fair-trade laws or are claimed to be otherwise improper. Among these complaints are charges that Government space has been used in the storage and display of consumer merchandise available for sale to employees, that penalty mail indicia have been improperly used, and that Government manpower has been improperly used in administering bulk purchasing activities of such groups. Where these complaints have been specific the Bureau of the Budget has referred them for investigation to the heads of the agencies concerned.

3. Voluntary organizations of Federal employees which contribute to the welfare and morale of Federal employees merit the encouragement and support of the departments and establishments. It is not believed either feasible or desirable to establish governmentwide policies which might have the effect of depriving these organizations of the opportunity to engage in activities of a type which are commonly accepted as normal functions of employee organizations sponsored or permitted by private employers. The head of each departrent and establishment should, however, take appropriate action to assure that the support provided to such organizations does not result in the use of Government facilities and manpower in any manner or for any purpose contrary to law.

ROWLAND R. Hughes, Director. Mr. BRYLAWSKI. I just want to say the District of Columbia Business Practices Council is a local trade organization composed of retail merchants, and we intended to and I do in my statement bring to your attention one form of Government competition which perhaps you are not too familiar with, and which perhaps on the overall picture of Government competition is not too important, and yet it is important to us.

We felt it worth while to bring it to your attention as an added reason for the passage of the type of legislation you have under consideration.

We do not express any particular favor over any particular bill which is pending before you. We have not had the opportunity to study them all. We do favor legislation of this kind.

That is all I want to say in addition, of course, to my statement which is in the record, I understand.

The CHAIRMAN. That is right.

Mr. OSMERS. Mr. Brylawski, I would like to ask you whether you feel you

should establish in the executive branch of the Government some place where members of your District of Columbia Business Practices Council can present their case for the ending of some competitive Government activity, and where the appropriate Government department could come and defend itself?

Mr. BRYLAWSKI. We would be most highly in favor of that, Mr. Osmers.

Mr. OSMERS. Do you feel that the President should be required to make a report each year to the Members of Congress and the people of this country on competitive business activities and the progress that is being made to eliminate them?

Mr. BRYLAWSKI. I think it would be most helpful.

Mr. OSMERS. Do you think before any new discount club could be started within the Government that they should be made to go to the Director of the Budget and prove their case and prove the need for their activity?

Mr. BRYLAWSKI. I feel that, and I also feel in no case would it be justified. Even those that are existing. I would like to go a little beyond that.

Mr. OSMERS. I realize that the existing ones will require a painstaking and careful job with topflight personnel to weed out those that are unnecessary and those that should be continued. But certainly as to

the new ones it seems reasonable that, Mr. Chairman, we demand that they prove their case to the Director of the Budget, or to some other official in the Government.

Mr. BRYLAWSKI. I certainly agree with that, Mr. Osmers.
Mr. OSMERS. I have nothing further.
The CHAIRMAN. That is all.
Mr. BRYLAWSKI. Thank

you,

sir. Mr. WARD. Is there anyone else in the room who wants to make a statement?

(No response.) Mr. WARD. There are no other witnesses. The CHAIRMAN. We will adjourn until Monday morning at 10 a. m. (Whereupon, at 11:20 a. m., the committee adjourned until 10 a. m., Monday, July 19, 1954, in room 1301, New House Office Building, the regular hearing room of the Committee on Banking and Currency of the House of Representatives.)

GOVERNMENT IN BUSINESS

(H. R. 8832, H. R. 9834, H. R. 9835, and H. R. 9890)

MONDAY, JULY 19, 1954

HOUSE OF REPRESENTATIVES,
COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D. C. The committee met at 10 o'clock a. m., Hon. Clare E. Hoffman (chairman) presiding.

The CHAIRMAN. The committee will come to order. Our first witness is Mr. Percival F. Brundage, Deputy Director of the Bureau of the Budget.

STATEMENT OF PERCIVAL F. BRUNDAGE, DEPUTY DIRECTOR,

BUREAU OF THE BUDGET Mr. BRUNDAGE. The four bills now before your committee, H. R. 8832, H. R. 9834, H. R. 9835, and H. R. 9890, all have the same general purpose: to terminate or limit those activities of the Federal Government which are conducted in competition with private enterprise. The Bureau of the Budget fully supports this objective.

President Eisenhower stated during the campaign: To bring Government closer to the people we will set up these principles and adhere to them: That no Federal project, large or small, will be undertaken which the people can effectively do or be helped to do for themselves; that no Federal project will be undertaken which private enterprise can effectively undertake ***

In accordance with the principles established by the President, the executive branch has already initiated a program to reduce or terminate, wherever compatible with the national interest, Government competition with private enterprise. The Business and Defense Services Administration of the Department of Commerce is examining specific complaints of Government competition, and, where the facts warrant it, discussing with the agency concerned the ways and means of eliminating or reducing such competition. The Department of Defense has issued a directive calling for an analysis and justification for the continuance of commercial-industrial facilities operated by the military establishments. Certain of these facilities have already been discontinued.

There is also a study underway by the Hoover Commission in this direction.

The Bureau of the Budget is presently planning to ask the other agencies to make a similar review of commercial-industrial type facilities and report as to the action taken.

201

Something has already been accomplished by the Bureau of the Budget through its ordinary budgetary policies.

The bills before your committee represent four somewhat different approaches to the problem of Government competition. H. R. 8832 provides for the creation of a new independent agency, an AntiGovernment Competition Board consisting of the Secretary of Commerce as Chairman, the Secretary of the Treasury, the Comptroller General, and the Director of the Bureau of the Budget, or their duly designated deputies. The Board would have authority to consult and cooperate with officers of the Government to determine the practicability of limiting or terminating competition, and to make recommendations to the President concerning any proposals to establish new Government enterprises which would compete with private industry.

H. R. 9834 requires the Director of the Bureau of the Budget to submit to the Congress in January of each year a list of all activities of the Government which compete with unsubsidized private enterprises and which can be terminated without seriously impairing Government activities which do not compete with unsubsidized private enterprise. The bill also establishes procedure to be followed by the Senate and the House of Representatives with respect to termination bills.

H. R. 9835 provides that the President shall examine, and from time to time reexamine, all Federal activities which compete with private enterprise and determine what the effect, if any, would be on essential Federal programs of the discontinuance of these activities.

The President is authorized to terminate any commercial activity which can be carried on by private enterprise without substantially impairing essential activities of the Federal Government.

H. R. 9890 provides that the President shall issue instructions and regulations for the termination, limitation, or establishment of business-type operations of the Federal Government which are competitive with private enterprise. The bill assigns to the Secretary of Commerce the duty of receiving and acting upon complaints of Government competition, and requires the Director of the Bureau of the Budget to make specific recommendations to the President concerning proposals to establish new Government business-type operations.

H. R. 8832 would add a new independent agency to the already excessive number of agencies reporting directly to the President. The Anti-Government Competition Board created by the bill would, to a considerable extent, overlap and duplicate work now being performed elsewhere in the executive branch. We believe that the executive branch already possesses adequate machinery to perform the functions assigned to the Board, and that the establishment of a new agency is unnecessary and undesirable. Consequently, the Bureau of the Budget does not favor enactment of H. R. 8832.

H. R. 9834 is largely concerned with rules of procedure in the Senate and the House of Representatives. Section 1 of the bill, however, would impose a very heavy workload on the Bureau of the Budget by requiring it to submit to the Congress each year a list of all activities which compete with private enterprise and which can be terminated. It is doubtful that the thorough study and analysis required for the preparation of such an exhaustive list could be

accomplished with the Bureau's present staff resources, particularly at the time of the greatest demand for the budgetary program.

There would be no objection, however, to the enactment of H. R. 9834 if a provision similar to section 4 of H. R. 9835, which would permit greater flexibility in scheduling and conducting the examination of each commercial activity, were substituted for the present language of section 1.

Section 4 of H. R. 9835 reads as follows: The President shall examine and from time to time reexamine each commercial activity engaged in by each department, agency, and independent establishment in the executive branch of the Government and shall determine what the effect, if any, on these central activities of the Federal Government would be on terminating such commercial activity.

As to H. R. 9835 and H. R. 9890, we believe that substantial progress is being made, and can continue to be made, toward the reduction and termination of Government competition under existing statutory authority. If it is the view

If it is the view of the Congress, however, that a declaration of congressional policy and new legislation_would support and strengthen these efforts, the Bureau of the Budget favors the approach taken in those bills.

The CHAIRMAN. Mr. Osmers.

Mr. OSMERS. Mr. Brundage, I would just like to make a few remarks before I ask any questions.

As a result of the work of the Harden committee, and preceding committees, and the public hearings that have been held by the full committee for the last 3 days, we seem to have come up with something of a unanimous opinion among the members of this committee that needless Government competition with private enterprise should be ended. There is, as there always will be, and probably should be, some difference of opinion as to the exact methods that should be followed in connection with this. As you probably know, I am the author of H. R. 8832, and when I discussed that particular bill with Mr. Hughes over in his office a couple of weeks ago, I must say that he made a very good case for the contention which you put in your statement that we need not establish a new board within the Government to report to the President and that probably a better way of approaching the problem of the businessman can be found.

Nearly all of the witnesses who have cared to express an opinion on this subject have urged that we establish within the executive branch some place where they could place their case for a hearing, and where the appropriate Government officials may also make reply if they care to do so.

It has been suggested, and it is embodied in H. R. 9890, that that official, or that place be in the Department of Commerce, or the person would be the Secretary of Commerce and he would report to the President and then the President once a year would make a report to the Congress on the progress that had been made and what the state of the Union was with respect to the competitive activities.

We would also place within the executive department some authority to review the new competitive activities, which authorization is contained in H. R. 9890, and that authority would be given to the Bureau of the Budget. I find absolutely nothing to disagree with in H. R. 9835, which is Mr. Hoffman's bill. I have felt all along that it would be helpful to the cause all around if we could make a few

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