The deficiencies of Government supply operations spring from the following primary causes:

First:  Supply is not fully recognized as an important executive function.
   At a time when personnel and budgeting have achieved status as vital staff functions, there has been a continued failure to appreciate fully the relationship of supply to Government efficiency.  There is no comprehensive Government-wide system that gives adequate emphasis to the many phases of supply.

Second.  This failure is reflected in an inadequate supply organization for the Government as a whole as well as for the various departments and agencies.  The Bureau of Federal Supply, which is intended to be the supply organization for the Federal Government, is inappropriately located in the Treasury Department where it does not have adequate authority or facilities to do a satisfactory job.  The departments and agencies do not have effective supply organizations.  The result is a confused Federal supply system where agencies compete with one another for scare commodities, maintain duplicating storage facilities in the same locality, and operate

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as many as 17 different systems of property identification at one time.

Third:  This failure is reflected further in the personnel system which does not provide competent staff to fill supply positions.  Although purchasing is a highly skilled profession that requires intimate knowledge of trade conditions and markets, salaries paid in Government agencies are inadequate to recruit and keep persons with the required professional competence.  Personnel processes fail to make proper acknowledgment of the skills required.

Fourth:  A maze of laws and regulations surrounds the whole process with unnecessary red tape.  The emphasis of the laws is not on promoting efficiency and economy but upon preventing fraud.  Overregulation encourages routine buying and prevents economy and the exercise of initiative.  Purchasing is consumed in red tape.  It is estimated that, on over half of the 3,000,000 purchase orders issued by civilian agencies, the cost of paper work exceeded the cost of the items purchased.

Fifth:  The system of budgeting and appropriating funds fails to emphasize the need for advance planning of supply needs and fails to provide adequate control over supply expenditures.  Budget officers must estimate their requirements nearly 2 years in advance and, as a result, most estimates are mere guesses.  Funds remaining near the end of a fiscal year are frequently expended for supplies and equipment in order

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to avoid returning the money to the Treasury.  Advance schedules of buying are inadequate.  Purchasing officers do not participate to the necessary degree in budget and operational planning.

Sixth:  Some phases of the supply operation are regulated by statute as well as by decisions of the Comptroller General; whereas other phases have neither legislative nor administrative sanction.  Purchasing is regulated by both statutes and by detailed administrative rulings.  Disposition of surplus property is governed by over 369 separate statutes.  On the other hand, storage and issue, traffic management, standard specifications, inspection, and property identification have almost no legislative sanction and are governed by a very limited number of administrative regulations.  The result is that some of the mutually dependent supply operations are so closely regulated as to stifle initiative and hamstring efforts to improve the supply system; whereas in other operations there is insufficient legislative sanction to support constructive administrative action.

Seventh:  The Government has failed to compile adequate cost and statistical records which are needed for the efficient management of supply operations.  Most agencies are overburdened with a surplus of complicated statistical and other records but few agencies have the type of data for making  intelligent budget estimates and management decisions relating to manpower and supply requirements.

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