the socioeconomic programs which were overlaid upon the procurement process. And, last, I want to make a comment about the Government acquisition people with whom we have to deal and who are the players on the team.

With regard to reauthorization of OFPP, we hope that you would keep in mind that the final authority for regulations should stay with OFPP. There will be a battle between the agencies and OFPP over this issue. But if OFPP is to continue with any authority, reauthorization should require that the final approval of regulations be retained by OFPP.

Perhaps it can be delegated; perhaps it should be used only after an agency has reviewed the regulations. There are many ways to approach the problem, but the final authority over acquisition regulations should be retained by OFPP.

OFPP should be a single voice to Congress from the executive branch on this subject. All too often different agencies speak their minds before the Congress in conflicting fashion. Some one person should bring to this committee and to the Senate and to the rest of the Congress the views of the administration on this complex subject.

Finally, OFPP should be a place for contractors to go to gain some uniformity in the system. It should be a place to lodge complaints, and hopefully a place to see to it that there is some uniformity between agencies.

With regard to the socioeconomic problems, our prepared statement says that when the Commission on Government Procurement made its report in 1972 there were 39 statutes overlaid upon the procurement process. Today there are actually 54 programs, that is, 54 different programs.

These programs include everything from the slaughtering of livestock to buying roller bearings from a specific place in Minnesota. The Congress has never looked at those programs in toto; nor have they been observed singly. Cost estimates of their impact on the system have never been prepared.

We hope that if nothing else comes from congressional review of the socioeconomic programs that the cost to the taxpayers be evaluated against the success of each program. Some of these programs are from before 1900. Many of these programs came in the 1930's. Quite a number of programs came in the 1970's.

All of the programs need to be reviewed and the cost to the taxpayers should be considered when looking at the results obtained from the programs.

Many of the programs are quite good. However, they may be improved with a little oversight.

With regard to the last subject, namely, the Government personnel who must deal with this system, I hope that we do not lose track of this problem. These people are literally abused by 60,000 pages of regulations and 54 socioeconomic programs while they are trying to obtain the product for the Government which the Government sorely needs.

They do not receive the training or support, such as adequate secretarial help and computer services which you would find in private industry.

These individuals are charged with a tremendous responsibility. This is where the problem is. If we help them, I am sure that the regulations will be better enforced and the products they purchase will be acquired at the most reasonable price.

Thank you.

Senator DANFORTH. Mr. Dembling, do you have a statement? Mr. DEMBLING. Thank you, Mr. Chairman.

I, too, wish to thank the chairman and this subcommittee for the opportunity to present our views on Federal procurement.

As the Office of Federal Procurement Policy moves to develop a uniform and unified procurement system, it presents a difficult and vital channel, both to the executive branch and to the Congress.

We generally agree with the general set of principles, objectives, and recommendations which have been fashioned. They highlight many of the deficiencies in the present procurement system and some possible solutions.

In that respect it refocuses in a timely way the unfulfilled findings and recommendations of the Commission on Government Procurement, which we believe-as Mr. Hiestand pointed out-are still valid today.

The section on public contract law has in the past commented on specific initiatives undertaken. They plan to continue to do so in the future.

We would stress the importance of giving emphasis to the development that would make for a unified system rather than a loosely related package of individual initiatives.

We believe that a procurement system should be specific as to the management and enforcement role. It appears necessary that management mechanisms have to be developed or refined which will insure consistent application of policies throughout the executive branch once implemented.

We believe that emphasis should be placed on the continued development, completion, and implementation of the Federal Acquisition Regulation System, known as FAR.

So far the FAR is an excellent start toward a major step toward achieving the objective of uniformity and simplification.

However, we also recognize that the success of any system is in its management. This means people. The Federal procurement work force numbers over 100,000 people today. Many entering this work force are not qualified by experience or training.

We urge the development and strengthening of a professional work force as well as continued research to improve procurement practices. Well trained and competent people are vital to Government procurement.

No system will provide efficient, effective, and economic procurement without this element. We hope that the regulations which will be fashioned, together with competent personnel, will permit less rigidity in the system so that procurement personnel will be given the responsibility and authority to make the quick decisions required and to avoid the overmanagement that is so prevalent today.

You, in your opening statement, Mr. Chairman, gave an excellent example of this overmanagement. Procurement is a manage

ment tool. It is to be used to accomplish the mission which is sought by the agency.

Too often we have lost sight of this reason for procurement. It tends to become an end in and of itself.

I have one last point which has been of particular concern to me over the years. That deals with the proliferation of regulations in many of the small, and not so small, businesses.

They do not have the resources to study, analyze, and apply all the regulations that are being issued. I hope there could be extracted from all of the regulations a group that would pertain particularly to the small business or middle-sized business firms in the country.

Perhaps a single volume or a reference tool could be developed instead of having these smaller firms having to wind their way through the entire maze of regulations that we have today.

Thank you very much.

Senator DANFORTH. I want to thank you very much.

As you pointed out, personnel is perhaps the most important aspect, the key aspect of any procurement system.

Are we looking at problems which statutes can change? Or, are we fooling ourselves that Congress can pass a law and somehow fix the Government procurement process?

We can pass a statute, and people will still be buying things, and Government agencies will still promulgate regulations to govern as to how people buy things.

Do you think-how worthwhile is it for Congress to address itself to statutory remedies for the Government procurement problem? Mr. HIESTAND. I will take a crack at that first.

Obviously we believe it is important and necessary. What we have now is a system which has grown without any real oversight or direction. Therefore, we have a great proliferation of statutes to begin with.

Years ago the Procurement Commission identified some 4,000 statutes which had an impact on how procurement is done. There is a great variety of differences between the statutes that now exist. They apply to different agencies, even in the same areas. The statutes are worded differently. They are interpreted differently. This adds to the confusion about all the regulations that exist. I did about 25 years or so in the Government as a lawyer. Therefore, I can talk from that experience. It is a problem for the people in Government to really understand what the rules are.

It is terribly complex for the businesses which are contracting with the Government to understand what the rules are and why if a requirement is one way with agency "A" it is different with agency "B."

I do not think there is a cure-all, Mr. Chairman. It is certainly necessary to put our house in order. I think we can certainly simplify the statutory base. This will help simplify the regulatory base. Then it will make it easier to train people to understand what it is they are supposed to be doing.

I think that will be a big help to all of us.

Senator DANFORTH. Let me ask this.

Some of the Federal requirements in the area of procurement go to matters of social policy or governmental policy, which a lot of people in Congress would view as very worthwhile.

For example, there are programs to increase minority opportunities. The Davis-Bacon Act is another point of controversy. Yet, it is my own view that we should not use a legislative remedy going to problems of procurement to try to fight the Davis-Bacon battle. If you assume that concept, that we will not disturb the socioeconomic programs, and look to statutory improvements in the procurement area, could you take a guess at quantifying, in dollars, how valuable this effort would be to the taxpayers and the Government?

Mr. HIESTAND. It is just a guess, but I would say in the billions of dollars.

Senator DANFORTH. Per year?

Mr. HIESTAND. That is right.

Mr. DEMBLING. Mr. Chairman, you realize that estimates vary, but there are about $125 billion spent each year on Federal pro

curement.

While I recognize that social policy is effectuated through Federal procurement because of the great clout which is the Government's, there should periodically be, it seems to me, a balancing of the advantages and disadvantages of those policies.

They should be examined. Many of the social statutes we are dealing with today as they impact Government contracting were enacted during the Depression when there was a different set of criteria for the development of those social policies. Those ought to be examined.

Whether they are still effective and are still carrying out the mandate of the Congress as when they were first legislated is what should be examined.

Mr. HIRSCH. Mr. Chairman, let me give you two specific examples.

I am picking on the socioeconomic programs, not because they are socioeconomic programs, but because they are examples that come to mind.

The Davis-Bacon Act—and I know you do not want to handle that subject per se-but this is a very small aspect of it. That is, the filing of weekly payrolls.

Weekly payrolls must be filed by construction contractors for contracts over $2,000. This value was set in the 1930's. Today the low floor is obviously a problem. The end of the unnecessary filing of weekly payrolls could save hundreds of millions of dollars.

This one technical change would not change anything of substance in the statute other than the anachronistic need to file these payrolls, which are presently stored in Government warehouses, and are not used by Government officials.

There is another technical change. Congress just recently passed Public Law 95-507 which requires mandatory subcontracting plans from prime contractors. Plans are submitted on a contract-by-contract basis. Every contract has to have its own plan.

Some prime contractors have hundreds of contracts and hundreds of separate little plans. One company estimated it cost them

$3 million a year just to administer this new statute. This is just one company and one statute.

By fine-tuning many of these socioeconomic programs that were legislated in years past, hundreds of millions-possibly billionscould be saved.

There is a difference between repealing and fine-tuning. I think the Congress could fine-tune a number of the 54 socioeconomic programs overlaid in the procurement process.

Senator DANFORTH. Is the present procurement system anticompetitive? Does it discourage competition?

Mr. DEMBLING. Certainly for the small and perhaps middle-sized firms, which are confronted with the tremendous regulatory system which has been fashioned, it does discourage businesses from bidding.

I am familiar with many companies which have had one or two experiences and feel that they cannot afford to bid and put together proposals. In some of the larger acquisitions which the Government makes, proposal preparation runs into millions of dollars. That has to be absorbed by companies. They are discouraged because of the regulatory process. Even after they overcome the initial barriers making the proposal, then the administrative costs and the overmanagement which occurs involve tremendous amounts of money. Of course, these are passed on to the taxpayer. Consequently, they feel it is not worthy of their efforts.

Senator DANFORTH. We had hearings a couple of days ago on the subject of late payment and whether or not Congress should require the Government to pay its bills within 30 days.

The position taken by some officials of the Government is that that is too great a burden. It is a paperwork burden. We will have to have more Government personnel monitoring when bills are submitted and when they are being paid.

They felt it was just too much trouble for poor Uncle Sam to cope with.

Do you have a feeling on that question?

Mr. HIESTAND. Sir, that is a problem. The problem on the other side is for the company which may go 6 months without getting any of his invoices cleared through the system, which is thenparticularly for a small company-sending them out to the banks. They have to borrow at high interest rates to keep the necessary cash flow.

It is this that turns a company off from wanting to do business with the Government. So there are problems on both sides. But somehow it gets back to the basic thing. Money usually talks. If the Government has to be concerned that something is going to cost them more, I think that is the incentive we have to put on the Government procurement people to administer their contracts on time and get their payments out on time.

If it costs more money, then that ought to be internal and the Government will say: "Why are you not getting it done right?" Mr. HIRSCH. A few years ago there was the case of the computer which broke down out West. This Government computer pays most of the companies out West. It was quite a number of months before many companies were paid.