Treasury shall “* * make a complete report to the Congress concerning expenditures made and obligations incurred, by classes and amounts; and (2) through the Director of Procurement, to purchase, or to provide a system for the purchase of all materials, supplies, and equipment to be procured with the said funds." The Procurement Division deemed it impracticable and uneconomical to do the entire buying from Washington. Field offices, strategically placed, would offer many advantages. Federal Emergency Relief Administration offices in the field, already performing the bulk of purchasing, became the nucleus of a Nation-wide system of procurement offices. The Procurement Division formally established these to do the buying for agencies operating under emergency relief funds.

Approximately $8,000,000,000 were appropriated for the relief program. By far the greatest dollar volume of purchases was for the Works Project Administration. Other agencies for which purchases were made under this progam included the Farm Security Administration and the Civilian Conservation Corps. The Procurement Division, doing all the purchasing, reached a peak of 5,411 emergency employees by September 1936. This emergency staff prepared specifications, issued proposals, received and analyzed bids, made awards, and assembled all necessary documents on which payments to contractors were predicated.

At the height of this program, offices existed in each of the 48 States, in Puerto Rico, Hawaii, and the Virgin Islands. As the program contracted, having served its purpose, the Division's field organizations were conformably reduced in number and size. During the program, all agencies in the field so disposed had made use of their services, which were swift, efficient, and adaptable. Elastic field purchasing offices proved a great advance in purchasing technique.

With the issuance of the President's Reorganization Plan No. I on April 25, 1939, the Public Buildings Branch was transferred, effective July 1, 1939, from the Procurement Division to the Federal Works Agency.

On June 10, 1939, the President approved Director's Order 73, which provided, in part, as follows:

in order to * *

increase the efficiency of Government operations and * * * (to) eliminate overlapping and duplication of effort, I (the Director of Procurement) hereby prescribe the following regulations: 1. As used herein

(a) The term "agency" means any commission, independent establishment, board, bureau, division, service, or office in the executive branch of the Government, except the War and Navy Departments and the Marine Corps.

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(b) The term "supplies" means all tangible personal property including, but not limited to, materials, supplies, articles, facilities, improvements, machinery, equipment, and stores.

(c) The words "procurement of supplies" and "procurement" include all functions relating to or associated with the purchase, rental, warehousing, distribution, and transportation of supplies, and services incidental thereto. 2. The Procurement Division, Treasury Department, shall hereafter undertake the performance of procurement of all supplies for use either at the seat of government or in the field for all existing government agencies and such agencies hereafter created: Provided, That any agency may perform such procurement itself to the extent permitted by the Director of Procurement, until such dates as the Director may designate with respect to specific agencies, specific kinds of procurement or specific supplies.

3. The offices of the Procurement Division now existing in the several States shall form the nucleus for the field activities of a general procurement service. 4. All records and property pertaining to, or utilized in, the procurement of supplies by any agency, and all personnel engaged in the procurement of supplies for any agency, are hereby transferred to the Procurement Division, such transfers to be effective upon such dates as the Director of Procurement may prescribe with respect to specific agencies, specific kinds of procurement, or specific supplies. Such part of the unexpended balances of appropriations or funds, available to any agency for personal services and other expenses, in connection with the procurement of supplies which the Secretary of the Treasury, with the approval of the Director of the Bureau of the Budget, shall transfer to the Procurement Division pursuant to Treasury Department Appropriation Act of 1940 (Pub. 65-76th Cong., 1st sess.) and any other law authorizing such transfer, shall be available for the use of the Procurement Division in performing the functions of procurement undertaken pursuant to this order.

5. The Director of Procurement may, with the approval of the Secretary of the Treasury, issue such regulations and instructions as may be necessary to make the provisions of this order effective.

6. The provisions of this order shall not apply to the War and Navy Departments and the Marine Corps.

7. The regulations governing the operation of the Branch of Supply, Procurement Division, approved by the President April 12, 1935, are hereby superseded to the extent that they are inconsistent with the provisions of this order.

In effect, this Order identified definitively the Procurement Division. In June 13, 1939, a memorandum with a questionnaire attached was sent to Federal departments and establishments informing them to "continue their respective procurement systems" until further notice from the Director of Procurement. The questionnaire, to be returned by the following month, asked for all information regarding purchasing and warehousing activities of the agencies, both in Washington and in the field. On the basis of such information, it was contemplated that new policies would be formulated evidencing the Procurement Division's intention to assume purchasing only after determining advantages to the Government.

To assure successful operation under Order 73, a study of the Division's operating units was ordered by the Secretary of the Treas

ury. The primary purpose of the study was to ascertain whether the Division was ready to take on the additional work load of Treasury bureaus and other Government agencies. Throughout, the Division observed the general principle that in no case was the work of an agency to be interrupted by actual centralization of certain procurement functions. Many considerations favored consolidation of procurement functions in the Treasury Department prior to acting on those of other Government agencies. Foremost was the opportunity to gain experience in the preliminary studies.

In the three months immediately following issuance of Director's Order 73, the Procurement Division assumed a majority of the purchasing functions of the Federal Works Agency, the Federal Security Agency, the National Capital Parks of the Department of the Interior, and the Bureau of the Census of the Department of Commerce. Simultaneously, analysis of other related procurement activities of these agencies was being pursued. The Division was at last working toward the goal embodied in Executive Order No. 6166 systematically and effectively.

To determine the effect of purchasing thus far centralized, purchase orders processed by the Procurement Division for the month of November 1939 were critically appraised. Results were most enlightening. Of the purchase orders received, 86.1 percent were for less than $100 each, total cost of such purchases representing only 3.8 percent of the cost of all Procurement Division's purchases for that month. Conversely, the remaining 13.9 percent of purchases represented 96.2 percent of the total expended. It also developed that purchase requisitions against General Schedule contracts were being routed through the Procurement Division by those agencies for whom purchases were being centralized, the Procurement Division issuing purchase orders for these requirements. Accordingly, early in 1940, authority was granted to agencies involved to transact purchasing for amounts less than $100 and all General Schedule purchasing which involved only placement of purchase orders against term contracts already effected by the Procurement Division.

The importance of having centralized information on the nature and extent of purchases became apparent. Upon taking up this problem with the Bureau of the Budget and the Congressional Appropriations Committee, authority was obtained to undertake the reporting of all Federal purchases, effective July 1, 1941. The ground work was accordingly laid for direct approach to extending the responsibility placed upon the Procurement Division under Executive Order No. 6166 in the determination of policies and methods of purchasing.

PART 2

Chapter VIII

METHODS OF FEDERAL PROCUREMENT

The history of Federal procurement establishes conclusively that a centralized governmental purchasing agency offers numerous operating advantages and economies. Success or failure of centralization depends primarily upon two things: (1) An intelligent policy determination describing the purchasing agency's scope and defining its authority; (2) a practical and economical method of operation to avoid unnecessary administrative detail and delay.

Central procurement of requirements common to two or more Government agencies is both practical and economical. It avoids competition between Government agencies in the market for the same supplies, and permits standardization through simplification. Submission of requirements to an agency employing trained procurement officers to do the buying is another major advantage.

The determinant of the degree of centralization is the scope of procurement activity which can be most advantageously handled by the central procurement organization. In evolving proper methods of operation, the central procurement office relies upon a complete and detailed picture of the requirements of using agencies, factual information, accurate reports of requirements, and a knowledge of available Government stocks.

Policies and scope of the central purchasing agency, once crystallized, the next important consideration is the method of doing the job. Government agencies and large corporations alike are frequently prone to overemphasize paper work. Periodic reviews should be made therefore so that procurement processes may not become top-heavy. Administrative steps found to be impractical or antiquated must be eliminated. Each step in the document flow, similarly each report or form, involves the effort not only of the employee who prepares the original, but as well the time of those who distribute, verify, code, record, and file. Of course certain operations are basic to the processing of a procurement transaction. Administrative processes, however, should be subordinated to primary procurement objectives. Pur

chasing procedure, with emphasis on purchase or related procurement need, should be simple and direct.

Simplification in administrative procedure is undoubtedly one of the major problems in Government. Adequate records are required to show expenditures were made in the public interest; nevertheless, procedures should be streamlined, essential steps consolidated to whatever extent possible, and procurement accomplished with a minimum waste of time and effort. Devotion to simplifying procedures in the expeditious handling of requisitions renders the buying agency more efficient, avoids delays, and serves the best interests of the Government.

A central buying agency of the Government never wants for assignments, for needs of agencies may fluctuate but do persist. As the Congress creates new agencies or authorizes spending of additional funds, needs vary in volume and diversity. Many requisitions by various agencies for supplies develop out of needs encountered in the administration of laws under their jurisdiction.

In Government service, filling a requisition entails the spending of appropriated money in a designated fashion as authorized by the Congress. Purchases must be chargeable to an authorized appropriation; otherwise payment will be summarily disallowed by the General Accounting Office.

Some idea of the wide variety of needs can be formed from an examination of the annual budgets of various departments and agencies. Monies are appropriated for such unrelated services as "the gaging of fishing streams," "the control and prevention of the spread of the Mexican fruitfly," and "the suppression of counterfeiting and other crimes." The Navy Department is allotted money for the maintenance and care of lepers, special patients, and for other purposes in connection with the Island of Culion. The Department of Labor is granted funds for investigating and reporting upon matters pertain- . ing to the problems and welfare of children. Again, appropriations for the Federal Security Agency may cover expenses incurred in enforcing the Sea Food Inspectors Act, while money is allotted for the purchase of entertainment and recreation equipment by the Veterans Administration.

1

Besides the regular functions of Government, authorized funds for emergency or war activities are provided. The operations of the Coordinator of Information were financed by funds assigned to the President. The Selective Service receives funds for its administrative operations to induct men into the armed forces. Likewise the

1 Established by Presidential order of July 11, 1941. Exclusive of foreign information activities which were absorbed by the Office of War Information by Executive Order No. 9182 of June 13, 1942, functions were transferred to the jurisdiction of Joint United States Chiefs of Staff (Office of Strategic Services) by military order of June 13, 1942.