The CHAIRMAN. Well, I think you better find out, Mr. Ray, because it is a very important function. If it is a Government function, you certainly ought to know it because you are counsel for the Department of Commerce. Mr. RAY. Perhaps I misunderstood. We were to deal with other matters in connection with your hearings commencing today and the particular questions with regard to the Business Advisory Council were not outstanding for discussion today. I am not prepared to discuss it. The CHAIRMAN. You are correct partially. You were to look into the question as to what the real status of the Business Advisory Council was and let us know. We have Mr. Honeywell this morning and we will discuss with him after he makes his statement concerning matters appertaining to the Business and Defense Services Administration. You are correct in that sense. But since you discussed this matter of Business Advisory Council, as it flowed from the inquiry addressed to you, as to what the status of this council was, these questions naturally came to the surface, to help you if possible come to a conclusion. Namely the conclusion that the Business Advisory Council is or is not a Government agency. Mr. RAY. I am sure your questions will be helpful to me, Mr. Chairman. The CHAIRMAN. When will we get a decision on the BAC? Mr. RAY. I think I can confidently say during the course of this week. Mr. SCOTT. May I ask some questions? The CHAIRMAN. Surely. Mr. SCOTT. Mr. Ray, it is my recollection of the meeting which we held to cover the testimony today was that you were to explore certain legal questions raised as to the status of BAC and determine as soon as possible, considering the mountain of material which has piled up in 30 years as to what files can be relevant and be made available to this committee. That was one of the things we discussed; isn't that right? Mr. RAY. I believe that is correct. Mr. SCOTT. And then as I understand it, when we were expecting you to testify today primarily-or rather to see that we had witnesses here today to testify-primarily on activities of employees WOC for the BDSA and use of advisory groups by that organization. That is what I expected you to testify on today. Mr. RAY. That is my understanding. If I misconstrued it, I am sorry, Mr. Chairman. We did proceed on that understanding. Mr. Honeywell and Mr. McCoy are here. We have a prepared statement that is prepared to deal with that statement. Mr. Scorr. On the WOC employees, the chairman will get into that, but I am again curious as to how far we will go back, because the first WOC employees of this Government so far as I know was a man named D. Hyam Solomon and a man named Robert Morris both from my way. Both of these gentlemen worked for the Government without compensation. I would be curious to see whether we will go back to Robert Morris or Hyam Solomon or we are going back to Daniel Roper. Do you know those two WOC's, Mr. Chairman? The CHAIRMAN. I read a statement before you came in and I felt it was quite essential for the Government to avail itself of exceptional talents like WOC's. It is a question whether we should have a right to go into their actions. Some of the privileges that they may have had may have been abused. We want to find out. We conducted the inquiry a few years ago and we came up with the conclusion that they should be employed and are essential. Some members of the House felt they should not, but we felt they should. It is a question of the method and manner of their employment. Mr. SCOTT. I agree with you, Mr. Chairman. The impression that goes out of Washington over the press wires, they don't make the news; they report what we do, but the news goes over the press wires that there is something criminal if you want to help the Government without being compensated for it. Or there is something criminal in such phrases as WOC or others like that. The CHAIRMAN. That stems from the conflict of interest statutes; that is where the difficulty comes from. We have had abuses and we would like to inquire into that. Mr. SCOTT. If we have had abuses, let's by all means find out about it. The CHAIRMAN. That is right. Mr. Honeywell, I am sorry we kept you waiting. You have a statement and you may proceed. Mr. HONEYWELL. Mr. Chairman and gentlemen: It is my understanding that this committee is studying certain aspects of the employment of persons "without compensation" in Government agencies. In connection with that study, I have been asked to testify regarding the Business and Defense Services Administration and its use of without-compensation personnel. I am glad to appear before this committee to speak about BDSA, the agency which I have headed since its establishment in October 1953, and which has been responsible to a major degree for defense production and mobilization readiness activities affecting by far the largest segment of American industry. I am equally glad to speak about the so-called WOC program in BDSA which, in my opinion is just as important today as it was during the period of Korean hostilities. BDSA HISTORY, PURPOSE, ORGANIZATION, AND ACCOMPLISHMENTS The BDSA was established by Department of Commerce Order 152, on October 1, 1953. The new agency succeeded the National Production Authority, which had been created in September 1950 to carry out the Department's responsibilities under the Defense Production Act of 1950 during the Korean war. The primary purpose of BDSA is to assure achievement of military and atomic energy programs by channeling, where necessary, the materials and products required therefor, in accordance with the Defense Production Act of 1950, as amended. In addition, through delegations to the Secretary of Commerce from the Director of Defense Mobilization, BDSA has been assigned major responsibility for the industrial mobilization preparedness program. This continuing long-range program stems from the provisions of the Defense Production Act, the National Security Act of 1947, and other statutory enactments relating to the national defense. The BDSA also serves as the focal point within the Department of Commerce for the coordination of programs designed to foster and promote the domestic commerce of the United States. These programs stem from long-standing statutory responsibilities assigned to the Department of Commerce by the Congress. Establishment of BDSA was the result of the Department's efforts to adjust its organization to the changes in defense programs and policies following cessation of Korean hostilities early in 1953. The basic organization as set up in October 1953 has remained unchanged since that time. The agency is under the general supervision of the Assistant Secretary for Domestic Affairs. It is directed by an Administrator, who is appointed by the Secretary of Commerce. The Administrator is responsible for determining, developing, and coordinating policies and programs and for directing all operations of the Business and Defense Services Administration. He is assisted in these matters by a Deputy Administrator. Both the Administrator and Deputy Administrator are full-time salaried employees of the Government. The basic policies and programs of BDSA, as determined by the Administrator, are carried out by 25 industry divisions, with the assistance of an Office of Field Services. Special programs are carried out in cooperation with the industry divisions by an Office of Distribution, an Office of Technical Services, and an Office of Small Business. Designated staff officials advise the Administrator and assist the divisions and offices on such matters as stockpiling industrial defense and mobilization preparedness. Substantial progress has been made toward carrying out all of the agency's programs during the 21 months since BDSA was created in October 1953. Details with regard to work accomplished have been reported quarterly and annually to the Joint Committee on Defense Production, and are a matter of public record. Typical of the matters covered in each of these reports are the following: Progress on current defense programs (including special priorities assistance for military and AEC projects, operations relating to basic materials, machine tools, tax amortization, stockpiling, and compliance and enforcement); progress on industrial mobilization preparedness (including operations under the defense materials system, industrial defense, supply requirements for full mobilization, and critical components); and industry-Government cooperation (including the use of industry executives and of various types of industry groups in forwarding the programs for which BDSA is responsible). BDSA INDUSTRY ADVISORY GROUPS The authority to consult with industry for the purpose of carrying out its broad functions has been inherent in the Department of Commerce since its inception. In 1950, it received an additional mandate with the passage of the Defense Production Act, which expressly provided for the establishment of such business advisory committees as may be appropriate in the formulation of regulations and orders. During the life of the Department's National Production Authority, 554 industry advisory committees were established. In line with the extension of the Defense Production Act in 1953, these were transferred to NPA's successor agency, the Business and Defense Services Administration. Group consultation with industry takes four forms under the program as conceived by BDSA, as follows: Industry conferences, industry advisory committees, task groups, special conferences. In all four types, the criteria contained in the Defense Production Act requiring fair representation for independent small, for medium, and for large business enterprises, for different geographical areas, for trade association members and nonmembers, and for different segments of the industry, are strictly observed. The subjects discussed at these meetings pertain principally to defense production and mobilization preparedness. In 1950 the Department of Justice suggested certain guidelines the observance of which would tend to minimize the possibility of violation of the antitrust laws which might stem from Governmentsponsored meetings with industry groups. BDSA's industry meetings are all conducted in strict conformity with these guidelines. In fact, there exists in BDSA a special staff to monitor the committee program, to assure conformity with the guidelines enunciated by the Department of Justice, and to assure adequate representation from the various segments of industry. The Small Business Administration has a standing invitation to send its representatives to all BDSA-sponsored industry meetings, except task-group meetings, which usually involve technical matters. The Small Business Administration, as well as other interested agencies, also receives copies of an advance list of meetings showing all meetings that have been scheduled and may request participation in any meeting. With the exception of task groups, the Small Business Administration receives copies of all minutes, whether or not its representative attended the meeting. Although meetings are closed, press releases are issued at the conclusion of every industry conference, industry advisory committee meeting, or special conference. Press releases on task-group deliberations are issued on a selective basis, depending on the nature of the subject being considered. Minutes of all meetings, except where classified, are supplied to the general public upon request. The CHAIRMAN (reading): Minutes of all meetings, except where classified, are supplied to the general public upon request. We asked for those minutes. Mr. RAY. The minutes were supplied to your committee over 3 months ago. The CHAIRMAN. Some of them were. Mr. RAY. All that were requested. Mr. WALDEN. Were the ones we requested in the June 29 letter supplied? Have any minutes been supplied since June 29? Mr. RAY. I don't know. Mr. ROPER. May I answer that? Mr. RAY. Yes. Mr. ROPER. About 3 months ago, Mr. Chairman, the committee was furnished with all IAC and related minutes. We have your request for conference and special conference minutes. Those minutes have been compiled and should be with you very shortly. There is a very substantial number of minutes, Mr. Chairman, and it takes quite a while to collect them. The CHAIRMAN. All right. Mr. HONEYWELL. May I proceed, sir? BDSA EMPLOYMENT OF WOC PERSONNEL Mr. HONEYWELL. Turning now to the use of "without-compensation personnel" in other than advisory or consultative positions, so-called WOC's, the Business and Defense Services Administration currently employs some 29 such individuals. This is done under the authority of section 710 (b) of the Defense Production Act of 1950, as amended, and under Éxecutive Order 10182, as amended. Sec. 710 (b) of the act authorizes the employment under regulations issued by the President of persons of outstanding experience and ability without compensation and further provides that persons so employed may be exempted from the operation of certain sections of the United States Code, commonly referred to as "conflict-of-interest statutes." Executive Order 10182 in turn authorizes the employment of persons on a without-compensation basis to positions other than advisory or consultative when the requirements of the position are such that the incumbent must personally possess outstanding experience and ability not obtainable on a full-time, salaried basis. The CHAIRMAN. In addition the Executive order provides that the conflict-of-interest statute would apply and there is no exemption if in the WOC's operations he does anything that would tend to favor the company that he represents with respect to allocation of materials, tax amortization, and matters of priorities, and so forth. Mr. HONEYWELL. I believe, sir, that is covered a little later on in this statement. The CHAIRMAN. Excuse me. Mr. HONEYWELL. In exempting persons so employed from the operation of the various conflict-of-interest statutes mentioned in section 710 (b), the Executive order has nevertheless imposed substantial limitations on the exemption. The effect of these limitations is to preserve in force the prohibitions against (1) the WOC's participating in the negotiation or execution of any Government contract with his private employer or with any corporation or entity in which he is directly or indirectly interested; (2) against his making any recommendations or taking any action with respect to individual applications for relief or assistance under the act made by his private employer or by any corporation or entity in which he is directly or indirectly interested; (3) against participating either during employment or for 2 years thereafter in the pros 67271-55-pt. 1-3 |