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Mr. BRENNAN. To begin with, the Purchasing Division as established by law is a service of supply for about 70 District agencies from the largest, the public schools, to the smallest, the Board of Tax Appeals. Senator Cain. You do not mind my interrupting occasionally? Mr. BRENNAN. No, sir. Senator Cain. It is an all-inclusive purchasing service? Mr. BRENNAN. That is right.
Senator Cain. Not a nickel's worth of anything is purchased for any agency of the District of Columbia except through your establishment ?
Mr. BRENNAX. For supplies, materials, and equipment.
Mr. BRENNAN. As early as 1887, a property clerk was appointed in the District of Columbia and given limited authority over the procurement of supplies. The work was expanded in 1912 when the title of property clerk was changed to purchasing officer for the District of Columbia. This was accomplished by the act of Congress approved June 26, 1912, which provided :
Hereafter the Purchasing Officer shall, under the direction of the Commissioners, supervise the purchase and distribution of all supplies, stores, and construction materials for the use of the government of the District of Columbia, and shall give bond in such sum as the Commissioners may determine.
Under this authorization the Purchasing Officer is required to purchase all of the supplies, materials, and equipment required for all agencies of the District of Columbia, about 70 agencies in number, including requirements of the public schools, libraries, public health, safety, welfare, correctional, public works, recreational, administrative offices, etcetera, embracing all types of commodities and equipment; practically everything from cotter pins to heavy machinery, and, under services, meals for prisoners at police court and in policestation houses, to transportation of crippled children and undertaking services.
On October 18, 1945, the responsibilities of the purchasing officer were increased by action of the Board of Commissioners in delegating to the purchasing officer certain of their contractual powers under the provisions of the Hébert Act of December 20, 1944. Under this authority it is the duty of the purchasing and contracting officer to award all contracts for the procurement of supplies, materials, and equipment and for certain services. It should be noted, however, that there is no legal and binding obligation on the part of the District of Columbia in the cases of supply and service contracts of a valuation of $1,000 and over, until the Commissioners have approved the formal contract documents.
All procurement for the District of Columbia is subject to the provisions of law, such as section 3709 of the Revised Statutes of the United States; the act of Congress which requires the District of Columbia, as far as possible, to make purchases from the general schedules of supplies of the Bureau of Federal Supply, formerly Procurement Division, and from Federal prisons; the statutory limitation on the price of typewriters, which was amended recently'; Public Act 600, approved August 2, 1946, which covers, among other items, purchases up to $100 in valuation without competition and purchases from a single source of supply upon certification of purchasing and contracting officers of the Government; the act of March 2, 1911, establishing a revolving fund of $50,000 in the Purchasing Division for the purchase and distribution of certain types of construction materials, and they are granite curbing, sewer pipe, sewer brick, etc.—this fund had a book value of about $116,000 on June 30, 1946—compliance with the 8-hour law, the Walsh-Healey Act, and others. Purchasers are also governed by policy recommendations of the purchasing officer which bear the approval of the Commissioners; decisions of the Comptroller-General of the United States and regulations of the Commissioners.
Contracts for supplying the needs of the District of Columbia are required to be awarded to the lowest responsible bidder after proper advertising, based upon clear and definite specifications which permit of fair and open competition, setting forth a complete statement of what the buyer requires of the vendor. Where competition is not practicable, the law permits purchases to be made from only one source of supply upon written certification of the contracting officer.
Purchases are also made from such special sources of supply, such as the Government Printing Office, Post Office Department, Bureau of Federal Supply Stock, Bureau of Federal Supply Fuel Yard, District of Columbia penal institutions, and War Assets Administration.
During the fiscal year ending June 30, 1946, the total valuation of all purchase orders amounted to $6,300,000, of which approximately 55 percent were open-market purchases on competitive bids by the District, and 45 percent from special sources of supply.
The total valuation of purchase orders for supplies, materials, services, and so forth, for the fiscal year ended June 30, 1937, amounted to $4,900,000.
The appropriation for salaries in the Purchasing Division for the fiscal year 1937 amounted to $57,000. We have no money appropriated to us to buy supplies for the departments, but only for salaries. At that time, there were 29 employees on the statutory roll. The total appropriation for the current fiscal year amounts to $77,827 for 30 employees including 3 at the property yard, 2 inspectors and 1 property yard keeper.
Senator Cain. Thirty as opposed to twenty-nine in how many years?
Mr. BRENNAN. Ten years.
I would like to explain that during that period, the Chief of the Division of Printing was transferred from the Purchasing Division pay roll to the Executive roll. One new order writer was authorized, and one employee to assist in the procurement of surplus war property.
Senator Cain. The volume of work, however, which presumably goes through your hands today, is considerably heavier than it was 10 years ago, am I correct?
Mr. BRENNAN. There is no doubt about it, sir, especially during and after the war years.
Senator Cain. You have mainly become more efficient?
Senator Cain. That is an interesting period of 10 years in which your organization work increases and you find it possible to do an effective piece of work with the same personnel.
Mr. BRENNAN. Yes, sir. I give credit, of course, to the officials and employees who have been in the office for years, and know the work.
Because of the last pay act increasing salaries, and in order to pay the automatic within-grade Meade-Ramspeck promotions, $87,865 will be required for the fiscal year 1948. No additional employees have been allowed in this budget. The increased appropriation in 11 years results from the creation of one employee whose present compensation is $3,522.60 per annum and the operation of law in granting increases in basic salaries and within-grade promotions under the Mead-Ramspeck Act, and reallocations authorized by the Civil Service Commission amounting to $1,920 since July 1, 1936. The increase in basic salaries of approximately 30 percent was based on salaries in effect several years ago and not those in effect in 1937.
Senator Cain. Let me interrupt you just a minute.
Mr. Fowler, at the time your pay bill was passed, was a presentation made by any one that we would like to have money for employees generally, but we would like to go on record now as saying we are not going to be able to pay additional pay increases without additional tax revenue from somewhere?
Mr. FOWLER. Senator, when this pay bill was before the Congress, we had nothing to say whatever. It was universal, as far as the Federal departments were concerned.
Senator Cain. But it must have been immediately obvious to you gentlemen down in the Commission, that the pay bills were going to result in a terrific financial problem.
Mr. FOWLER. It was so obvious, we immediately recommended that a tax committee be.appointed to review the tax structure. The significance of the 40-hour week, time and a half, and the night differential, would vitally affect us.
Senator Cain. It will result in just what confronts us this morning. Mr. FOWLER. Just what happens now.
We knew it years ago. Senator Caix. Not that I get satisfaction out of my question or your answer. Nobody testifies but what they tell me of these pay bills. I wish in the future that all witnesses would cease referring to the pay bills, as such, and assume that we take that for granted. Proceed, sir.
Mr. BRENNAN. At this point, I would like to call attention to the fact that during all the war years the added work of handling priorities, allocations, rationing, and so forth, for all District departments was absorbed without any increase in personnel. Congress did allow, however, one new position to assist the purchasing officer in the procurement of surplus war property. There has been a substantial increase in procurement services required in the past 10 years due to equipping and furnishing new buildings, such as Glenn Dale Sanatorium, Calvin Coolidge High School, new Police Precinct Station No. 2, the new Municipal Center Building and the new courts buildings in Judiciary Square. With the start of the war, a new department of civilian defense was established which called for the procurement of air-raid sirens, medical supplies, food supplies, uniforms, auxiliary stand-by equipments, and so forth. The purchasing oflicer also served as a special purchasing agent in purchasing civilian defense supplies paid for from donations of the Central Labor Union here.
The testimony that has been presented to your committee in the past several days, supports the indisputable fact that costs have risen in the past 10 years. I would like to point out that there are certain inflexible budget items such as food, fuel, medicine, and drugs which must be obtained, in most cases, regardless of cost. I do not mean to imply, however, that some judgment was not used in the purchase of food supplies more advantageously priced and in more ample supply than the scarcer and more expensive items. All during the war years substitutes were used so far as possible, such as meat extenders and the purchase of greater quantities of eggs and fish when meats were so scarce. During the fiscal year 1946 approximately 41 percent of the total expenditure of $6,300,000 was for food, fuel, medicines, and drugs. Important city services had to be maintained, and where normal items could not be procured substitutes were used or were improvised. Strict conservation measures were made effective through application of the principles of preventive maintenance of all types of equipment, office machines and so forth.
According to the McGill Commodity Service, Inc., and based on an index in 1926 of 100, the all commodity index in August 1939, of 63.7 had risen to 165.9 on March 14, 1947. The index on industrial commodities has risen in this 8-year period from 70.9 to $150.
Weekly Commodity Indices
[1926 equals 100) Prepared for the National Association of Purchasing Agents by McGill Commodity Services,
Inc., (Released March 19, 1947) Agricultural.
53. 2-152. 4 Livestock.
56. 2-223. 6 Building materials.
85. 5–196. 4 Chemicals.
87.5-117. 6 Fuels.
65. 4–122. 8 Hides and leather
76. 7-175.5 Nonferrous materials_
70. 9-138.4 Ferrous materials.
100. 1-131, 1 Paint materials.
68. 5-232. + Paper and pulp-
75,5–147.1 Fine textiles.-
58. 6-164.0 Coarse textiles
49. 5-208. 5 Vegetable oils.
59. 1-344. 2 Sensitive agricultural.
56. 6–179. O Sensitive industrial.
58. 2–146.0 During the week ended March 8, 1947, the Bureau of Labor Statistics weekly index of commodity prices reached 148.7 of the 1926 average, the highest level since late 1920; 11 percent below the May 1920 all-time peak.
According to Prof. Irving Fisher, of Yale University, the purchasing power of the dollar, on a 1926 basis, as of March 14, 1947, was 62.10 cents.
A few typical cases of price increases the District has had to pay are as follows:
Cast-iron water pipe, 8-inch, December 1941, $1.19 per foot; December 1946, $1.81 per foot.
Pig lead, grade A, June 1943; $0.072 per pound; September 1916, $0.1138 per pound.
Cotton felt batting, August 1943, $0.135 per pound ; January 1947, $0.2025 per pound.
Premixed concrete, 1942. $6.85 per cubic yard ; 1947, $8.30 per cubic yard.
Commerce Department officials, in appraising the price situation, expeet price drops by next fall on a number of items that, in the Department's opinion, have advanced too much. It believes foods, cotton goods, shoes, lumber, paint, drugs, leather, fats, and oils are in line for substantial corrections. It is understood that the Department also expects smaller declines for automobiles, consumer durable goods in general, woolens and worsteds, furniture and house furnishings, iron and steel products, paper, pulp, grains, and livestock.
Some economists believe that as far as retail prices are concerned the best hope is that they will come to rest 20 to 30 percent higher than what used to be considered "normal."
We are still in a pronounced seller's market in most commodity categories, especially consumer durable goods. Prices continue high and deliveries are, in most cases, long delayed. Our purchasing policy has been on a hand-to-mouth basis for. most commodities excessively priced, and, on a number of occasions, we have rejected bids because of excessive prices, or because of absence of a firm price that . is reasonable under present market conditions. No volume purchases are being made on the current chaotic market. We are not only price conscious but also quality conscious. Typical of this policy is the office circular issued by the purchasing officer to all departments in the matter of procurement of lumber. Lumber prices are fantastically high, and no doubt some buyers are responsible for this price strength. Prices today on some plywoods are three times as high as the prices were under OPA controls. Most seasoned hardwoods are at a premium and are very scarce. We agree with the monthly letter of the National City Bank of New York, which advocates:
The remedy for price increases that threaten stability is to buy less, not to do things that will push them up further.
Here is the circular, No. 959, that was issued on March 14, 1947. I would like to submit that for the record. (The circular is as follows:) GOVERNMENT OF THE DISTRICT OF COLUMBIA,
March 14, 1947. CIRCULAR No. 959 Subject: Purchase of lumber. To Heads of Departments:
Lumber prices are fantastically high, and no improvement in the present situation is indicated in the near future. Some buyers are partially responsible for this situation, as payment of premium prices strengthens the market and keeps prices high. Some plywoods, for example, are selling for three times the price under OPA.
We suggest a studied buying policy. Only purchases on a "hand-to-mouth" basis to meet important needs, which can be justified, should be considered for the time being. This applies to all purchases of lumber, whether coming under the heading of purchases under $100 or otherwise.
R. M. BRENNAN,
Purchasing Officer, District of Columbia. Mr. BRENNAN. I am prepared to furnish any additional details the committee would like to have as to the various commodities the District buys.