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to continue doing what they are doing, so unless somebody at the top really sets down on it we will not make much progress.
Mr. TEETOR. Certainly some of this legislation we have no objection to. We have no objection to H. R. 9835. We have no objection to H. R. 9890. I do not know that either one would be to effective, but we do object to H. R. 8832, and the establishment of a new agency of government. We think that might not help a great deal, and it would be just one more agency. H. R. 9834 requires the Director of the Bureau of the Budget to submit a long report to Congress, which is quite a workload for him. You have now a very effective agency in Government in the Business and Defense Services Administration, in the Department of Commerce, that is into this subject all the time. They gather information directly from industry through 26 different industry divisions in the Business and Defense Services Administration, and we ask these divisions to tell us whenever they are confronted with Government competition and whenever it is found they are, we start working on that. We have found that people at the top of these Government agencies today believe just like we do, and they are willing to help us, and they have helped us, and I think they will continue.
The big thing, as I said before, the important factor, is the desire on the part of public officials to do this thing. If we have public officials at the top who do not want to do it, I think regardless of the type of legislation we pass we will have great difficulty in getting the thing stopped.
I would like for Mr. Honeywell to speak at greater length about the Business and Defense Services Administration. Mr. Honeywell is the Administrator of the Business and Defense Services Administration. He has been right in the middle of this, and I would like for hir: to talk to you a little bit about this.
Mr. Dawson. This country is now facing a crisis which may or may not develop into a real hot war, as we call it. In the event that it did, and it would be necessary for the Government to speed up any part of its Defense Establishment, you would be for the Government doing whatever is necessary in the light of the circumstances facing the country, to prepare the country to meet the challenge, would you not?
Mr. TEETOR. Certainly.
Mr. Dawson. When World War I came we were unprepared. It was necessary for the Government to furnish money and to build buildings and buy machinery and so forth in order to meet the challenge, was it not?
Mr. TEETOR. I believe it was.
Mr. Dawson. And after World War I we sank our ships and we pulled in our claws, and when World War II broke out we were caught unprepared again, and consequently the Government had to go through a feverish effort to prepare itself to meet that emergency; that is true, is it not?
Mr. TEETOR. Yes, using private enterprise always to the extent it could be of service.
Mr. Dawson. Private enterprise could not do the job the Government did. It did not have the money. It did not have the means. It did not have the facilities to do it as quickly as was necessary in the light of the Department of Defense, which was charged with the responsibility of protecting this country; is that not true?
Mr. TEETOR. In many cases that was true.
Mr. Dawson. Then in many of these activities that the Government is now engaged in they had perfected their own tanks, perfected their own guns, and perfected many of the instruments in the defense of this country within their own plants; is that not so?
Mr. TEETOR. Yes.
Mr. Dawson. That work could have been done by private industry had they had the incentive to do it, or had they wanted to spend the time and money without any return in order to make the necessary experiments; is that not so?
Mr. TEETOR. I suppose that is true.
Mr. Dawson. But industry is not going to engage in anything unless they can see a return for themselves, a profit for themselves from the operation, are they?
Mr. TEETOR. No, sir.
Mr. TEETOR. That is the division that was established the 1st of last October. It is the Business and Defense Services Administration. Mr. Honeywell is the Administrator of it, and he would like to tell you about the BDSA.
Mr. Dawson. Under what authority was it set up?
Mr. Dawson. Do you have any relationship with the Small Business Committee of the Congress?
Mr. TEETOR. Yes, we have very close relationship with the Small Business Committee of the Congress.
Mr. Dawson. And you have worked on complaints that have reached you from that committee which in turn were received by the Members of Congress?
Mr. TEETOR. Yes; we have acted upon many of those.
Mr. Dawson. You do not regard it as a matter of congressional interference if a Congressman receives a letter from a businessman, or industry in his district, and he takes it to the committee, and then the committee brings it to you. You would examine the situation. You would not call that congressional interference, would you?
Mr. TEETOR. No, sir. We would welcome that.
Mr. Dawson. And if the Congressman received a letter from a businessman in his district and brought it directly to your attention, would you act on it?
Mr. TEETOR. Yes, we would try to do everything we could.
Mr. Dawson. You would not think the Congressman was unduly trying to interfere with you, would you? Mr. TEETOR. No, sir.
Mr. Dawson. You would think, in fact, that the Congressman was carrying out his duty to his constituents, when he is their National Representative, to take any complaints to you and call them to the attention of the ones charged with the responsibility of acting upon them, would you not?
Mr. TEETOR. I should think he should always do that.
Mr. Dawson. Then if a letter comes down you will not red-print it "CI," will you?
Mr. TEETOR. No, sir. You can send all the information to us you can.
We would like to have it. Mr. OSMERS. Mr. Chairman, first I want to tell Mr. Dawson that I do not want to interrupt his chain of thought. I do want to interject this thought—that while I have full respect for what was done by the Government during World War II, I want to say frankly for the record-even though I may disagree with Mr. Dawson—that had it not been for the skill and the energy and the know-how of private enterprise during any of our wars we never would have come out with that magnificent result we did. There were some activities that were purely of a Government nature where we had to take the men from private industry and put them in Government, or in uniform to accomplish the results, but in my opinion the American free enterprise system is the strongest board we have, Mr. Teetor, and that is why I am primarily interested in getting legislation of this type.
Mr. Dawson. You do not mean to say that I do not believe in free enterprise, do you?
Mr. OsmERS. I do not mean to say that. I always prefer to have a man's own words speak for himself. I do not need to speak for him. What I am trying to do in suggesting these various bills is to raise the subject a little above the business of a man writing a letter to his Congressman. Maybe he does not know his Congressman; maybe his Congressman does not like him; maybe his Congressman does not agree with him; maybe his Congressman does not understand the paint business; maybe his Congressman is away in Europe on an expedition. What I am trying to do is to set up a statute, a place where a legitimate busincssman, or an association, can place a case before the Government. I am not trying to win the case for him, or lose it. I.want to get it out of some committee that may be scattered all over this country, or somewhere else, and place it in the executive branch of the Government where it ought to be. That is the purpose of all these bills here-to try to do something about it.
I agree with what you said about the efforts of the present administration, and I am impressed, but administrations change. They
Personnel disappears, resigns and retires, and I feel that it is a job for Congress to set up some very simple machinery and work in this field.
Do you see any objection to having the President of the United States give an annual report to the country and to the Congress on progress in this field?
Mr. TEETOR. No; I see no objection to it.
Mr. OsmERS. Do you see any objection in requiring some remote branch of the Veterans' Administration, before they establish a painting plant somewhere 1,000 miles from Washington, to require that the Veterans' Administration, before they establish that competitivetype activity, present facts and justifications to the Director of the Budget, or the Department of Commerce, or someplace else?
Mr. TEETOR. No; I see no objection to that.
Mr. JUDD. Mr. Teetor, you said that you thought it would be a good idea for Congress to allow the departments to go along with what they are presently doing. You used the words "things you have in mind to do."
Would you mind telling us what some of those things are, or is it Mr. Honeywell who will testify to that?
Mr. TEETOR. That is what Mr. Honeywell will tell you.
Mr. JUDD. I will ask a little more specifically when the right moment comes, what are some of the things that you have in mind to do.
The CHAIRMAN. The Bureau of the Budget recommends to the Congress how much, and for what purposes, money shall be appropriated, does it not?
Mr. TEETOR. Yes.
The CHAIRMAN. As long as it is the policy of that Bureau and of the administration to get Government out of business, out of competition with private enterprise, why cannot the Bureau of the Budget throw out the requests that the various departments make for funds that enable them to get in competition with business?
Mr. TEETOR. I do not know that I understand your question. Will you state it again?
The CHAIRMAN. Yes.
The Bureau of the Budget comes to Congress every session and asks for money for specific purposes and in certain amounts. That is right, is it not?
Mr. TEETOR. Yes.
The CHAIRMAN. Assuming that the administration of the Bureau of the Budget wants to end this competition of the Government, why is it not screening the requests that come from the various departments? Instead of asking Congress for so much money for the Navy, so much for the Army, and some other department, which money they want to use to establish, for example, a paint plant, a coffee roaster or something else, why does not the Bureau of the Budget just forget it and not ask us for the money?
Mr. ÎEETOR. I do not know why they do not. I am not sure that they do not do a lot of that now.
The CHAIRMAN. They do a lot of it, but still you admit that Government is in business and in competition with the taxpayer when it should not be; is that right?
Mr. TEETOR. Yes. Most of these things were started a long time ago. The CHAIRMAN. I know they were, but they are still continuing.
Mr. TEETOR. I think that would certainly be something that the Bureau of the Budget could watch out for.
The CHAIRMAN. So, if the Bureau of the Budget performed its duty 100 percent, there would not be any need for us to be bothered about it; is that right?
Mr. TEETOR. I think that is right. If they screen the other agencies' budgets as well as they screen the budget of the Department of Commerce, I would say there would be little opportunity for new Government businesses to start.
Now, Mr. Honeywell would like to make a statement.
The CHAIRMAN. Mr. Honeywell, you heard the last two or three questions I asked.
Mr. HONEYWELL. Yes.
The CHAIRMAN. Tell me, is there any reason why the Bureau of the Budget cannot do this job on its own volition, if it wants to?
Mr. HONEYWELL. Mr. Hoffman, I am not qualified to answer that question.
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?
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. In 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