We have in the past been awarded term contracts covering a period of 6 months to 1 year against which not a single order was received. If quantities were guaranteed in full, it could result in lower bidding because raw material and supplies could be ordered in total, assuring the contractor of a firm cost. Items could be run when machines were idle. They could be used as fill-ins during downtime-taking care of overhead, and merchandise would be available when ordered. I'm afraid that I have approached my allotted time. I could go into these matters in great depth if time permits. As a matter of interest to the subcommittee, I am submitting copies of some correspondence with GSA dating back to 1957 in addition to the letters here. Thank you for the opportunity of bringing this material to your attention.

Senator DANFORTH. Gentlemen, thank you very much.

Mr. LOEB. I have any of this material you want to go through, discuss or go into. I'd be happy to do so.

Senator DANFORTH. Well, I very much appreciate it. Mr. Cartwright, in your testimony you indicated that the Government was doing quite well. That it was getting below market rates on moving because of the high volume. However, other people have testified that it's so cumbersome to do business with the Federal Government, that there is so much redtape to cut through and that delays are so long that people are really unwilling to bid on Government contracts, and there is therefore less competition than there should be. And people who do bid on Government contracts adjust their bid upward so that they're paying more than they otherwise would. Are you stating a dissenting view from others, or maybe we need some more balance in the presentation.

Mr. CARTWRIGHT. Are you speaking in regard to redtape and-Senator DANFORTH. Yeah, I mean, generally, the general thrust was, both in St. Louis and here, was that when you do business with the Federal Government, it's a little different from doing business with anybody else. You end up with extraordinary delays and hurdles that you have to cross, as Mr. Dunkley pointed out. You have long delays in being paid.

Other people have testified that specifications are sometimes so detailed that just to meet those specifications the manufacturer has to go through a process that he would not otherwise go through. The possibility of having a product rejected, not because it isn't suitable for use but because it doesn't meet the standards of the specifications, is fairly great, and that possibility of rejection is built into the contract. And for that reason there is an artificial limitation on the amount of competition when you do business with the Federal Government. But, it seems that there is pretty stiff competition in your industry and that the Government is doing fairly well since a lot of people want to bid.

Mr. CARTWRIGHT. Well, it certainly seems to me that the competition has become greater in the last few years, and again as previously mentioned, I think that some of that is through deregulation. The Government recently issued a-approximately, what they call 107 certificates to about 100 companies to do business with the Government. And I've seen, you know, many more of these people in there. The danger of some of this is, I feel that, you

working with the Government through the years. We've been doing it for 40 years. As I look back, I would be very skeptical in jumping into that. It's very cumbersome and very expensive when compared to the private sector. But many of them are in there. They can become qualified and they can obtain some business-whether or not they're doing it at a compensatory level, and I know many of them aren't.

Senator DANFORTH. You said you brought your product, Mr. Dunkley?

Mr. DUNKLEY. Yes, I did, Senator.

Senator DANFORTH. Can we see it?

Mr. DUNKLEY. It's probably a little cold now, but it's in the back here, Senator.

[Beef turnovers were distributed to various individuals present.] Senator DANFORTH. I don't think I'm going to dig in right now, but I just wanted to see it. What's in there?

Mr. DUNKLEY. Ground beef, Senator.
Senator DANFORTH. Ground beef?

Mr. DUNKLEY. Yes.

Senator DANFORTH. Now this is-where is this served, in cafeterias on military bases?

Mr. DUNKLEY. No, Senator, it was first approved for Air Force special feeding only, but now on May 13 AFPEC gave full approval for troop feeding. It's now in the dining rooms.

Senator DANFORTH. So that when troops eat in the cafeterias or where food is served on military bases, they go through a line, do they, and they can pick this up in the line?

Mr. DUNKLEY. They can, Senator. They can go through the fast food line and pick it up, but it has now become a part of the menu that's served to them.

Senator DANFORTH. And it took about 1 year to get this on the menu?

Mr. DUNKLEY. More than 1 year, Senator. It took 2 years to get it done.

Senator DANFORTH. Was it worth it?

Mr. DUNKLEY. Senator, I must say that up to this point it's not economical because I still have to go from base to base to market the product instead of having it sent to the purchasing store. So it's very expensive.

Senator DANFORTH. What bases are you on now?

Mr. DUNKLEY. OK. Last week Friday, I returned from a sales trip. I went to Denver, Colo., to Lowry Air Force Base. I rented a car in Denver after finishing with Lowry and I drove up to Colorado Springs to Fort Carson. After meeting with the menu board at Fort Carson, I drove back to Lowry in Denver, returned the car, and flew to El Paso to Bliss-Fort Bliss. There I met with the menu board at Fort Bliss, rented a car, drove through the desert to Alamogordo at Holloman Air Force Base. I came back and was scheduled to go to Kirkland on Monday, but with the air controllers' strike I was forced to come back to Kansas City Sunday night so I had to cancel that appointment at Holloman. That trip, Senator, with all the rentals, air fares, hotels, and meals, cost me over $1,000. To realize any results from that trip it will probably take another 6 months.

Senator DANFORTH. And Mr. Loeb, what product do you make? Mr. LOEB. We manufacture business machine rolls for government as well as commercial. We manufacture teletypewriter rolls, perforated tape, business machine rolls.

Senator DANFORTH. So, paper that comes out of business machines?

Mr. LOEB. Yes.

Senator DANFORTH. Is that what it is, paper?

Mr. LOEB. It is paper, yes. And in that form, one of the biggest problems we have is some of the regulations, again, that were touched on by a previous gentleman. In regard to testing, when we buy our paper from the papermill, the papermills must test the paper as they're making it for conformity to strength, thickness, and various qualities of the paper. And they have very extensive laboratories with which to do this. We have not-I've been at it now for 25 years trying to get them to consent in the specification to accept a certification from the mill laboratory, which is approved by the Government as an accepted laboratory and so not be required to retest these items before we submit them for shipment. We can't do anything to it. All we do is slit it and make it smaller and rewind it. We can't change the composition. We don't do anything to it. This then extends the period in which we have an investment. We manufacture the product; then they come in and take samples. It is sent to the laboratory in Chicago for further testing, retesting. That takes 30 days. We can finish the product and it still can be 90 to 120 days before we get our money. The item is shipped and must be received at a depot. And it must go that process, and all those papers have to go back to Kansas City, where it is paid.

Our experience with the people in GSA has been extremely good. I think they have very fine people and very competent people. They're bound by these regulations to which you referred earlier. And I agree with you that there must be some protection. However, it has gotten to the place since the big hurrah in GSA about 1 year ago; there's nothing that goes on without a committee. No one person will make a decision. There's got to be at least three people making each decision, because they don't-no one wants to take the final result and take the chance of being criticized individually for these things.

Senator DANFORTH. Let me just give you the other side of the GSA situation and ask you to comment on it. We had a number of days of hearings last year and the year before on GSA purchases of office furniture.

Mr. LOEB. Yes, sir. I'm well familiar with it.

Senator DANFORTH. Are you? The great Art Metal case?

Mr. LOEB. Yes, sir.

Senator DANFORTH. Well, for those who aren't familiar with it, the allegations were that GSA had a very cozy relationship with a firm that made very poor quality office furniture and that GSA then had to buy it and repair it before it was usable. And all kinds of charges of impropriety were made-with witnesses taking the fifth amendment and so on in those hearings. But again, I'm in the same point with the last panel: the people who take advantage of

are all

vents this from happening. And it is just human

anything goes wrong to try to develop a systematic approach to dealing with it. Let's have a system which absolutely precludes anything from going wrong. So we have inspections, and reinspections, and we have specifications and reviews of specifications and long delays in awarding contracts. If you want to sell a turnover to the military, you go through 1 year and you have five different steps that you have to go through and so on and so forth.

Can you think of any reasonable approach to this? Is there a happy medium? Are we left on one hand with the possibility of an Art Metal and on the other hand with a situation where before you do business with the Federal Government you've got to get a couple of railroad cars and bang them together and see what happens?

Mr. LOEB. Well, we are familiar with the problems of inspection and I sympathize with it. In the case that you referred to-and I'm pretty familiar with it because small business really took the fallout on this situation-Congress, in my opinion and that of many others, threw the baby out with the dirty water. It was a problem with furniture; could've been handled in the section with furniture, without a complete and total rescission of all moneys, which affected us because we had contracts and they couldn't issue any orders. They were tied up. And my contract expired before the money was available to fund these orders, so we didn't receive them.

What to do about it? Certainly, I don't care what kind of a system you put in; if somebody really wants to get around it, they're going to find a way to do it. If they want to be crooked, they'll find a way to be crooked. Hopefully, they'll be caught at it and eventually they will be caught at it, but that doesn't mean that everybody else should suffer for it. These people in GSA-I've known these people for years, and I feel that I'm very fairly treated and knowing them well I sometimes will try to take advantage, maybe, and I'll call in and ask a question that is improper, and there is no way that I'm going to get that question answered because these people are well trained. They're intelligent people, and they're dedicated people. And today they're more dedicated than ever because they are so short on people to do things in the region in which I do business that business just stops sometimes. They can't-if a stenographer is sick and doesn't come in, they can't write an order, and it may be 1 week late in getting orders. out because they just cannot replace, by regulation now, cannot hire anybody to come in. I've even said, "Bring somebody from Overload, send me the bill, and I'll pay it. Let's get these orders out." So, these people are good people; they are afraid. And business is being done by committee because no one person will take the responsibility.

Senator DANFORTH. That's right. Let me just ask you each one short question and then we've got to wrap it up because we're already 15 minutes overtime and you've been very generous with your time. But weighing costs and benefits-that's what we're all supposed to be doing in Government—but weighing costs and benefits, do you think that the benefits in all of the details and all of the procedures, and all of the regulations, and the various steps,

assuring that things don't go wrong and preventing the Government from being ripped off outweigh the cost of the complexity, the delay and the reluctance of people to bid on Government contracts and the upping the price because of the complexity; or, in the alternative, do you believe that the system that we're operating on is more costly than the benefits that are derived from it? How are we doing on a cost-benefit analysis in Government procurement? Mr. LOEB. I think you're doing

Senator DANFORTH. Just from the standpoint of the taxpayer. Mr. LOEB. I think you're doing pretty well. Specifications and detailed specifications are for my protection as well as for the protection of the Government because it protects me against the person who wants to give shoddy merchandise or cut a corner or do something to be able to quote a lower price. Yes, it is the redundancy in some of these specifications that we find to be objectionable. I think there must be controls, yes-protection of both the Government and the vendor.

Senator DANFORTH. But you still think that we can loosen up and come out better for the taxpayer?

Mr. LOEB. Yes, sir. Obviously we have to put those costs in our bid.

Senator DANFORTH. Because it's so redundant and so complex and so detailed and so prolonged, particularly in this time of high interest rates that we could maybe take a few more risks but end up better as far as the taxpayer is concerned?

Mr. LOEB. Well, I think there are better procedures that could be-there could be longer contracts. There could be guaranteed contracts, as we mentioned, where they buy a specific amount and not ask the contractor to assume the responsibility that the Government should know what they want. They shouldn't ask me or any contractor to cover that cost. If they say they want 10,000 units shipped 1,000 units a month, fine; that's the way it could be and it'll save you an awful lot of money.

Senator DANFORTH. Uh-huh. Mr. Cartwright?

Mr. CARTWRIGHT. Well, I agree to that, and I think, you know, overall, this system is pretty good, but I think that the thing that sometimes escapes is general logic. And, you know, in my type of trucking business, it's a specialized type of carrier, but for years we've had to adhere to the regulations for general commodity-type carriers and all this type of information and so forth is not applicable. But, and when you look at the whole sphere, I really think if jointly, I mean, the Government is so big. I'm amazed every time I go to Washington.

Senator DANFORTH. So am I.

Mr. CARTWRIGHT. I've often thought, you know, how can anybody get a handle on this thing? But within these various sectors and departments, if for instance GSA, if a group of their people were allowed to sit with a group of people serving them, like his company or my company or whatever, and work these things out from both sides, I think it would save the taxpayers money. I really do. We can't expect them to know our problems all the way through.