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The CHAIRMAN. I do not see why you are not. Mr. HONEYWELL. May I suggest that that question be directed to Mr. Brundage.

The CHAIRMAN. All right, Mr. Brundage, you are still here. What is your answer?

(No response.)

The CHAIRMAN. The answer is obvious, Dr. Judd. The Bureau of the Budget could, if it operated effectively all the way down,

You may proceed, Mr. Honeywell.

STATEMENT OF CHARLES F. HONEYWELL, ADMINISTRATOR,

BUSINESS AND DEFENSE SERVICES ADMINISTRATION, DEPARTMENT OF COMMERCE

Mr. HONEYWELL. I appreciate the honor of appearing before you on behalf of the Department of Commerce. We have followed closely the excellent work being done by the committee and by its subcommittee, and we are confident of the good results of that work. We will be proud if we can in any way contribute to those results on this most important subject.

On two previous occasions, June 10, 1953, and March 16, 1954, the Department of Commerce was privileged to present testimony at hearings before the subcommittee of which Congressman Harden is chairman. At the second of these hearings the organization of Commerce Department's Business and Defense Services Administration and the methods of operation of its 25 industry divisions were described. It was indicated how these industry divisions, with their close contact with virtually all sections of American industry, are in an excellent position to assist the businessman in presenting his complaints and viewpoints regarding Government activities which compete with him to the agencies engaged in such activities. Our industry divisions and our entire staff have been hard at work on this.

I would like to give you some of the details of this work. The extent of progress made, and the indications of satisfactory outcome, will provide a background against which your committee can evaluate our comments, which follow, on this pending legislation.

Business and Defense Services Administration Divisions have knowledge of approximately 75 to 80 types of commercial and industrial activities of the Government. În about a third of these the businessmen affected are well aware of the details, extent, and reasons assigned for these activities. With respect to remaining activities, they are less well informed. They learn about this latter class of activities indirectly by supplying raw products and equipment, by loss of business to the Government, and loss of skilled personnel to Government employment. Because they do not know the extent of these operations and other details, they are understandingly suspicious of the Government operation.

To the extent that security permits, they should be fully informed concerning the extent of these operations and the necessity, if any, for performance by the Government instead of private enterprise. Business and Defense Services Administration undertakes to obtain this information for these businessmen and when we agree that the circumstances warrant such action to assist the businessmen in

bringing their case to the attention of the Government agency engaged in the competitive practice.

About 20 percent of these Government operations appear to be authorized by law, and the balance are matters of administrative discretion. Of the latter, 70 percent, or 40 cases, involve Department of Defense. Of these, more than 31 cases have been referred to Defense and discussed with them by Business and Defense Services Administration. As you know, that Department has now listed a total of 31 activities for identification of all establishments involved and complete analysis by the 3 branches of the service. The results of this program will be coming in beginning August 8 of this year.

While we in Business and Defense Services Administration can neither prejudge nor predict the outcome of these cases, we can say that our week-by-week contacts on this matter with the Defense Department are such as to develop a high degree of confidence that the facts will be uncovered, that industry will be fully consulted and that mutually satisfactory results will be obtained.

While most of our work thus far bas been with Defense, Business and Defense Services Administration has similar work with other Government departments. A start has been made, with the Post Office, where two complaints have been received. One has been withdrawn after the complainant was fully informed concerning the operation, and the other is being jointly explored by the Post Office and canvas goods manufacturers.

Thus it is possible to visualize present procedures leading to successful conclusions of the 80 percent of the cases coming into Commerce, involving matters of administrative discretion within the executive branch of the Government. It may seem that progress is slow, and perhaps uncertain. But it is difficult to visualize lasting successful outcome without thorough, painstaking, detailed analysis. At least one executive department is now aggressively pursuing this course, and all are greatly stimulated, and their work agumented by the work of the congressional committees and the Hoover Commission. Also, it must be remembered that a great many of these questioned activities have grown up and become firmly established over many years.

Even in regard to those cases of activities authorized by law, the machinery now exists in the form of congressional committees, the Hoover Commission, and a determined executive branch to bring out the facts and effect such corrective action as is required. Under these circumstances sound results will be obtained.

Mr. HONEYWELL. I believe Mr. Teetor, has given you the position of the Department of Commerce on the various pieces of proposed legislation, which follow in the next three paragraphs.

The CHAIRMAN. Unless there is some objection, we will just forget about H. R. 8832, and H. R. 9834. We might just as well forget those two.

There is one question which I have, Mr. Honeywell. On page 3 you state that at least one executive department is now aggressively pursuing this course.

Which one is that?
Mr. HONEYWELL. The Department of Commerce.
The CHAIRMAN. That is your own Department?
Mr. HONEYWELL. Yes, sir.
The CHAIRMAN. Do you have any questions, Mr. Dawson?

Mr. Dawson. No; except to congratulate him on the way he is doing this important job.

Mr. HONEYWELL. Thank you very much.

If I may add, I answered that question "the Department of Commerce" because that is one area in which I feel qualified to speak.

I want to add for the record that there is a tremendous amount of activity where we have it here within the Department of Defense along this same line, but I believe that you have scheduled testimony from that Department separately.

The CHAIRMAN. That is Mr. Wilson?

Mr. HONEYWELL. Yes, sir; and I believe Mr. Pike is to appear shortly.

Mr. Dawson. You are of the opinion that there is no necessity for pinpoint legislation at this time, setting out the activities and details to be carried out by a new agency?

Mr. HONEYWELL. That is correct, sir.

Mr. Dawson. And, you have no objection to a declaration of policy of the Congress that you continue to thoroughly look into this matter, and to eliminate it wherever it is necessary to be eliminated?

Mr. HONEYWELL. None whatsoever.

Mr. OSMERS. Mr. Chairman, I would like to ask Mr. Honeywell 1 or 2 questions.

The CHAIRMAN. You may proceed.

Mr. OSMERS. At the top of page 2 of your statement, Mr. Honeywell, you mention 75 or 80 types of industrial and commercial activities of the Government.

There has been a lot of reference made in committee reports and speeches, and otherwise, as to the number of activities in which the Government is actually engaged, and I believe it would be helpful, certainly, to the work of the Harden subcommittee, if you would be kind enough to furnish us with that list of 75 or 80 activities, some time subsequent to this hearing:

Mr. HONEYWELL. We will be happy to do that, sir. (The information referred to follows:)

DEPARTMENT OF COMMERCE, BUSINESS AND DEFENSE SERVICES ADMINISTRATION

Government competition with private business
CASES REPORTED BY DIVISIONS TO DATE, JUNE 1, 1954

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Government competition with private businessContinued
CASES REPORTED BY DIVISIONS TO DATE, JUNE 1, 1954

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CASES KNOWN, NOT REPORTED THROUGH INDUSTRY DIVISION Mailbag repairs: For decentralization, Post Office Department is about to install and staff five new stations. Declines to entertain private bids first.

Postal savings system: Comntroller General reported in 1952 that need no longer exists. Two bills pend. ing. American Bankers Association is active.

Synthetic rubber plants: Disposal is in hands of a commission appointed by the President.

Cooperatives and other tax-exempt activities:
Farmer cooperatives
Consumer cooperatives
Retail owned cooperatives
Mutual fire and casualty insurance companies
Mutual savings banks
Sa and loan associations
Production and credit associations
National farm loan associations
Credit unions

Mr. OSMERS. I want to say, Mr. Honeywell, that I think you have made a fine statement and a constructive statement.

BDSA is doing a good job, and I particularly want to subscribe to the last paragraph in which you say that the Department would have no objection to the enactment of either H. R. 9835 or H. R. 9890.

Mr. HONEYWELL. Yes, sir.
Mr. JUDD. Mr. Honeywell, are you a businessman yourself?
Mr. HONEYWELL. I have been, Mr. Judd.
Mr. Judd. How long have you been in the Government, sir?
Mr. HONEYWELL. I came with Mr. Weeks on January 20, 1953.

Mr. JUDD. To go back to the question which was discussed earlier by Mr. Dawson and some of the others about the things which the Government has to do, allegedly, when a war comes, and we are not adequately prepared, and speed is of greatest importance.

You have been in Government 172 years, and you were in private business a long time before that. Do you think that the Government

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