[Congressional Record Volume 140, Number 44 (Wednesday, April 20, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 20, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                    REFORMING GOVERNMENT PROCUREMENT

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, April 20, 1994

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, April 20, 1994 into the Congressional Record:

                    Reforming Government Procurement

       Although the process has not garnered many headlines, the 
     ``reinventing government'' initiative is moving forward in 
     Washington and in federal offices across the country to make 
     government work better and cost less.
       Most dramatically, the President and Congress are 
     proceeding with massive reductions in government personnel. 
     The goal is to cut over 252,000 federal workers by 1999. This 
     will save billions of dollars and result in the smallest 
     federal workforce since Lyndon Johnson became President. But 
     reductions in personnel are not the only way to save money 
     and improve performance. Various federal agencies are 
     designing and implementing plans for more efficient 
     operations. One important area where changes are coming is in 
     procurement--the government's purchase of goods and services.


                               background

       In performing its various tasks, the federal government 
     purchases about $200 billion of goods and services each year, 
     everything from paper clips to aircraft carriers. The 
     Department of Defense accounts for about two-thirds of that 
     total. About 142,000 federal employees work on procurement. 
     Any system this large will have some shortcomings--rigid 
     rules, too much paperwork, detailed specifications, multiple 
     inspections and audits. I have heard endless stories from 
     federal workers about not getting supplies and equipment they 
     need, getting them late, or watching the government spend too 
     much for them. One employee said it took a year to buy a 
     computer and another said the government paid $600 for an 
     item that cost $300. The problems with government procurement 
     demand reform.
       In recent years, the media features revelations of waste, 
     fraud, and abuse in military procurement. Many will remember 
     stories about $435 hammers and $700 toilet seats being bought 
     by the Pentagon. Unfortunately such stories have not 
     disappear. Just last month a congressional investigation 
     discovered that a defense contractor was charging $544 for a 
     spark-plug connector that could be, and in fact was, 
     purchased from an auto parts store for under $11. Pentagon 
     procurement is not the only source of problems, just the most 
     prominent.
       It would be a mistake to concentrate only on fraud and 
     abuse, important as they are. More common is inefficiency 
     caused by the very rules and procedures that govern federal 
     procurement. Federal procurement regulations run 1600 pages, 
     with 2900 more pages of agency-specific supplements. These 
     rules and regulations were created for rational and even 
     laudable purposes--to prevent fraud and profiteering, ensure 
     quality and safety, and promote desired social goals. Any 
     example of the latter are the requirements that the 
     government reserve some procurement for small businesses. 
     Safeguards against fraud and favoritism sometimes necessitate 
     extra checks and balances in the system.
       One consequence is that government rules and regulations 
     add time and expense to most purchases. Some of this ``red 
     tape'' may serve a purpose, but much does not. One example of 
     excessive specifications for safety and quality was made 
     famous last year by Vice President, Gore, who publicized the 
     government's nine pages of requirements for ashtrays 
     purchased for use in federal agencies. Elaborate travel 
     voucher procedures and cost the federal government about $2 
     billion a year.
       All this results in costs far in excess of those in the 
     private sector. Estimates vary, but procurement regulations 
     add 20-40 percent to the costs of goods and services. Another 
     measure of the problem is that overhead expenses account for 
     as much as 40 percent of government procurement expenditures 
     compared to 5-15 percent in the private sector. Some of this 
     is probably unavoidable in areas like national defense where 
     only a few companies exist that can build the hightech 
     weapons requested by the Pentagon. Clearly, however, the 
     costs of many rules and regulations can outweigh the intended 
     benefits.


                          how to effect change

       The President and Congress are working together to reform 
     the procurement process. Some of this can be done by the 
     agencies themselves without congressional action, and 
     several, including the Department of Defense, have begun the 
     process. But most of procurement procedure is written into 
     law and therefore requires congressional action to change it. 
     Comprehensive procurement reform legislation is proceeding 
     through the House and Senate and should be completed this 
     year.
       Four principles guide current efforts to revamp federal 
     procurement: simplification, decentralization, competition, 
     and commercialization. First, simplification means the 
     elimination of unnecessary regulations and specifications for 
     the products to be bought and the procedures used to purchase 
     them. Second, decentralization would cut the layers of 
     decision-making by reducing the number of officials who must 
     approve a decision to make a purchase and allowing lower-
     level managers to make more final decisions about 
     procurement. For example, agencies should be allowed to make 
     purchases under $100,000 through simplified procedures. 
     Third, competition would increase the use of the market to 
     produce lower costs and higher quality for government 
     purchases. One approach is to end government monopolies, such 
     as printing services provided by the Government Printing 
     Office. Another is to provide government purchasers with 
     continually updated information on suppliers and prices so 
     that they can get the best deal possible. Finally, 
     commercialization means buying more products ``off-the-
     shelf'' instead of having specially produced items that meet 
     often unnecessary government specifications, as with the 
     ashtrays. When the government buys a pillow or an integrated 
     circuit it should not have to buy products designed to 
     government specifications when equally good commercial 
     products are available. This applies to military as well, 
     where experts believe many items specially built to 
     ``military specifications'' could be replaced with cheaper 
     but no less reliable commercial equivalents.


                               Conclusion

       I applaud the efforts to streamline procurement. Taxpayers 
     have a right to expect prudent spending. Hundreds of 
     government employees have told me about the problems in the 
     system and possible ways to solve them. They often feel ways 
     to solve them. They often feel trapped by rules and 
     regulations they did not create and do not like. They hate 
     the waste and inefficency and want to do better by the 
     American people. While we cannot expect miracles from any 
     attempt to reform such a complicated process, my view is that 
     the current effort will bring substantial improvements and 
     help ensure that our tax dollars are better spent. There is 
     no reason why we should pay more, and get less, from our 
     government.

                          ____________________