(4) Analysis of forms and procedures.

(5) Analysis of space utilization.

(6) Analysis of the utilization of supplies and equipment.

(7) The development of systems and procedures, such as the use of machine methods for inventory accounting, invoice writing, the tabulation of bids, filing, and record keeping.

(8) The determination of the work load of existing and proposed organizational units, and the evaluation of personnel and material requirements therefor.

Basic information relative to Government purchases used by the Planning Division is supplied in large part by the Purchase Classification Section, the statistical organization for the Procurement Division. In accordance with the provisions of Circular Letter No. 472, May 24, 1941, copies of purchase orders issued by Federal agencies are regularly forwarded to the Procurement Division. for sorting, coding, and tabulating by the Purchase Classification Section. These compilations enable the Planning Division to determine the principal users of capital commodities in the Government's purchasing program, not as an end in itself, but as a means toward effecting constructive economies.

During the past 2 years increasing emphasis has been placed on planning Government purchases so as to promote the war effort. The Procurement Division, cooperating with the War Production Board and other war agencies, has been delegated many responsibilities relative to the procurement of nonmilitary items regularly required by the Federal service. The primary aim has been to provide for essential nonmilitary requirements promptly and economically with due regard for the demands of the war program.

The Planning Division has devoted continuous study to items purchased under General Schedule of Supplies term contracts to keep the Schedule abreast of changing conditions. War Production Board procurement policy specialists have been detailed to assist the Division. Notwithstanding limited supplies of many materials, the General Schedule has been revised to provide readily available sources of supply for essential items regularly purchased by the Government. Deletions have been made of uneconomical and nonessential items. Specifications have been amended in the interest of standardization through simplification, and conservation. Contract periods were shortened in many instances to enable suppliers better to judge their ability to furnish required quantities at stipulated prices. Greater flexibility of supply at lower prices for products was secured.

Largely as a result of Planning Division studies, action has been taken requiring that all purchases of certain classes of commodities by nonwar agencies be channeled through the Procurement Division. Individual requirements are combined, and purchases effected on a consolidated basis. Consolidated purchase programs have compre

hended passenger automobiles and motor trucks, wood office desks and file cases, new and used typewriters, paper products, lumber, electrical equipment, mechanical refrigerators, and machinery. Procedures vary. In the case of items of limited supply subject to rationing, such as motor vehicles and typewriters, requisitioning agencies are required to submit formal justifications of need on standard forms prescribed for the purpose. Formal' approval by the War Production Board, the Office of Price Administration, and other rationing authorities is secured in advance of making the purchase. Lumber purchases of not less than carload lots are cleared through the Procurement Division. Purchases of electrical equipment and machinery in amounts of $500 or more, and $300 or more, respectively, are handled on a consolidated basis. Although the approval of the rationing authority is not formally required for these supplies, requisitioning agencies are requested to submit supporting statements in the event priority certificates apply.

Consolidated purchase programs have made it possible to procure items of limited supply in a systematic and orderly fashion, minimizing wasteful competition among using agencies. The policy of spreading the business among a number of suppliers, an adjunct of consolidated procurement, promotes an orderly flow of production and the prompt filling of requirements.

In cooperation with the Office of the Petroleum Coordinator, the Planning Division encouraged the conservation of fuel oil by converting to coal. Circular letters requested Federal activities located in the East to revise their estimated future requirements accordingly. As a further means of assuring adequate supplies for winter, Government agencies were instructed to place orders for coal during the summer months and to stock up to capacity before October 1. Arrangements were made for additional storage space in the District of Columbia for both coal and fuel oil to supplement the fuel stocks at the disposal of the Procurement Division's Fuel Yards.

The Planning Division assisted the Office Machinery and Equipment Procurement Committee of the War Production Board in formulating a plan whereby the Procurement Division would undertake the purchase during the next 2 years of 600,000 used standard typewriters for the Armed Forces and other vital war agencies. Virtual elimination of the production of new typewriters made it necessary to shift used typewriters from nonessential uses to war work. Under the program, stocks of machines in the hands of typewriter dealers were purchased immediately. Inventory reports were secured from business organizations which had been large purchasers of typewriters in recent years, and from agencies of the Federal Government, and an appeal was made to the general public. In order to speed up the collection and repair

of used typewriters, local dealers throughout the country were appointed to act as agents of the Procurement Division. As the program got under way, the Planning Division drew up an organizational scheme for a special operating unit to assume the handling of procurement details and then withdrew.

Currently, the Planning Division is concerned with analytical studies pertaining to the rehabilitation, warehousing, and physical distribution of Federal property. It assists in drafting survey forms and in summarizing and analyzing the information reported in such surveys. Executive Order No. 9235 specifies that services and facilities of the Procurement Division may be utilized by the Director of the Bureau of the Budget to survey the quantities of supplies and equipment in possession of Federal agencies and the extent of utilization. On the basis of information secured from these surveys, and after consulting with the War Production Board, the Director of the Bureau of the Budget is authorized to "transfer from one Government agency to another such supplies and equipment as he may determine to be surplus to the needs of one agency and essential to the needs of another agency."

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The United States Government is the largest single consumer of telephone service in the world. In metropolitan Washington alone 239 private branch exchanges serve Federal agencies and the municipal government of the District of Columbia with a battery of 94,799 telephones. Adequate telephone facilities at each exchange are essential to expeditious handling of Government business. Through poor service inadequate facilities result in loss of time. Excess facilities, on the other hand, account directly for determinable extra expense.

The first organized effort to improve Government telephone service and reduce telephone expenditures was initiated in 1921 by the Chief Coordinator, Bureau of the Budget. The National Bureau of Standards, which at that time had a small group of telephone engineers, was directed to make a survey in the District of Columbia for the purpose of effecting economies without sacrificing service. Satisfactory results extended the surveys to all of the larger cities. The National Bureau of Standards discontinued this activity upon creation of the Procurement Division to which were transferred the functions of the Office of the Chief Coordinator.

Planning Division's Telephone Engineering Section seeks to determine adequacy of equipment and operators for standard grade private branch exhange service at minimum cost. Detailed records of each type of call handled at existing exchanges, peak load, operator

"Chesapeake & Potomac Telephone Co. records, January 1, 1943.

load, and switchboard schedules provide the basic data for such determinations.

Much of Procurement Division's telephone survey work thus far has been in connection with new Federal buildings housing more than one agency. In advance of occupancy, estimates of relative costs to the Government are developed for separate telephone service for each agency assigned to the building, for joint manual private branch exchange service and for joint dial private branch exchange service for all agencies. Generally, the greater the number of agencies and telephones served by a joint exchange, the lower the cost per telephone. Joint exchanges have been provided in many of the larger cities with consequent over-all economy to the Government. From the standpoint of procurement alone communication is an invaluable service.

PART 3

Chapter IX

PROCUREMENT POLICIES OF WORLD WAR II

Foregoing chapters have presented the history, organization, methods, laws, and theories of purchasing controls in Government. To summarize, peacetime procedure provided adequately for the normal volume of governmental buying. It sought to: (1) Permit all qualified suppliers to bid; (2) obtain goods in accordance with specifications; (3) place order with lowest responsible bidder who could meet delivery requirements and specifications; (4) secure delivery as required. Limits to governmental purchasing were set by Congressional appropriation and taxed but a small portion of productive capacity of the country's industry. Controls resulting from long experience served to fill the Government's needs for materials, labor, and transportation facilities.

As the world began to gird for war, high Government officials recognized that peacetime practices would soon be obsolete. Men of experience and vision stated long before war became an actuality that governmental planning would have to be revolutionized. In 1931, Bernard M. Baruch presented to the Joint Congressional Cabinet Commission "Suggested policies to provide without change in our Constitution, for industrial mobilization, elimination of profiteering, and equalization of the burdens of war." Sections here excerpted indicate the scope of the task, particularly as it applies to purchasing.

The first necessity for effective organization of demand is the assembly into one central control agency (or the direct control by one central authority) of the responsible head of each of the great procurement or supply agencies. To that central forum (which, as we have seen, and shall see in more detail, also.controls organized supply) they must bring:

First: A general statement of their procurement programs in finished goods and also broken down into initial estimates of their bulk requirements of such basic commodities as steel, wool, copper, etc.

This is difficult not only in the early days of a war, but also during war, because of the rapidly changing military situation. Nevertheless it is necessary to make the best possible estimates to the end that the central planning agency may make preparation to provide the necessary raw materials and fabricating facilities.