The numerous deficiencies in Federal supply operations are described in detail in the report of the Commission's Federal Supply Project which has been printed for distribution as appendix B of its reports.  it is sufficient to point out herein only a few of the major deficiencies:

1. Purchasing

   One of the major weaknesses in Federal purchasing stems from the lack of any central body to coordinate Government purchasing activities.  Small agencies buy for themselves, although the volume of their purchases does not permit the employment of a competent staff.  In common use items, consolidated orders for several agencies by a single purchasing office would achieve large savings.  The Bureau of Federal Supply, which was established as the central supply organization, has insufficient funds to purchase on a centralized basis.  A properly organized central supply service could almost completely eliminate purchasing offices in the smaller agencies.

a.   Purchasing requires a high degree of professional competence, yet many purchasing offices are not manned with competent personnel.

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c.   Purchasing offices lack information and funds necessary to schedule purchases so as to take maximum advantage of favorable market conditions.

d.   Purchasing officers have failed to develop cost records and other tools essential to an effective job of purchasing.

e.   Purchasing operations have degenerated largely into the routine practice of soliciting bids and awarding contracts to the lowest bidder.  An economical job cannot be expected unless purchasing officials are granted sufficient latitude to negotiate small purchases, to restrict competition to reliable vendors, and to give sufficient weight to quality of the product in awarding contracts.

2.  Storage and Issue

It is estimated that over 100,000 employees whose total annual salary rate exceeds 270 million dollars are engaged in storage and issue activities in the military and civilian agencies.

a.   There are too many storage warehouses.  These warehouses maintain duplicating inventories.

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   For example, in the Washington metropolitan area alone there are 72 different activities of the Government which operate storage and issue facilities exclusive of the Bureau of Federal Supply and the Government Printing Office.  In the field a similar situation exists.  Six civilian agencies alone show a total of 748 stores facilities at field locations with inventories in excess of 180 million dollars.

b.   A large part of the storage inventories are a long distance from the point of use so that issuance involves excessive transportation costs.
   It has been estimated that 42 percent of the Washington stores inventories are for the benefit of field stations.  much of this stock could be delivered by vendors directly to the field warehouses where they would be readily accessible to the establishments requiring them.

c.   Practically every agency has excessive stocks of supplies.
   These agencies are providing space and personnel to handle large quantities of supplies which, according to present rates of consumption, will be sufficient to meet their needs for periods of from 1 to 50 years.  A study of the stock facilities of 10 civilian agencies by the Office of the Budget showed that excess stocks averaged 70 percent of the total stock inventories.  (See chart, Excess Inventories in Civilian Agencies.)
   This situation arises from two primary causes, namely (1) most agencies do not have satisfactory systems of stock control which permit the replenishment of stock to be related to agency needs, and (2) most agencies invest appropriation

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balances at the end of a fiscal year in supplies so to avoid returning such funds to the Treasury.

3.  Traffic Management

   Annual charges paid by the Government for the transportation of property exceed 1 million dollars which is nearly one-tenth of the revenue of common carriers for the transportation of property.  Government property and its channels of movement differ materially from the commercial traffic for which carrier tariffs have been constructed.
   Most of the traffic personnel in the Federal Government are auditing transportation bills.  Only a very few employees are engaged in activities aimed at improving traffic management and reducing costs.  Agencies having well-developed traffic organizations have demonstrated that substantial savings can be achieved if attention is devoted to this problem.  The Reconstruction Finance Corporation, for example, effected savings of 17 million dollars on its wartime traffic with an average annual salary expenditure of $200,000.

4.  Specifications

   If products purchased are to be of satisfactory quality and are to meet the specific needs of the Federal Government, it is essential to establish standards which the products must meet.
   There is considerable evidence that many commodities which should be covered by specifications are not so covered; that many existing specifications are out of date; and that

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valid specifications are not being enforced.  Standards are described in terms of the physical characteristics or composition of the product rather than in terms of performance required.  Much of the responsibility for these conditions rests upon the individual agencies, but a large part results from the fact that the machinery for developing and enforcing standard specifications of Government-wide application has not been functioning satisfactorily.
   Specifications for common-use items are prepared under the Federal Specifications Board which is composed of the representatives of 11 agencies.  Preparation or revision of a specification has become a very lengthy process, averaging over 2 years, largely because there is insufficient staff time devoted to this work. 

5.  Inspection

Inspection is an essential phase of supply, since it is the method of determining whether the quality of materials or equipment received meets the requirements stipulated in the specifications or purchase order.
   in the civilian agencies there is no uniformity in quality of inspection, or in the basic concepts of what types of commodities should be inspected.  Inspection service and testing laboratories are scattered throughout the country without any coordination.
   In the military agencies, the quality of inspection was found to be reasonably good, but, in many large cities, each service 

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department maintains a separate inspection office.  There was also found to be a duplication of laboratory facilities.

6.  Property Identification

   It is impossible to provide economical management of personal property if its identity, classification, location, quantity, and physical characteristics are not known.
   The Government agencies do not utilize a standard catalog or other system of identifying items regularly maintained in stock.  in some agencies each supply point is permitted to devise its own catalog with the result that one part of an agency may be overstocked on a given item while another part is making additional purchases of the same item.  There is no uniform system of cataloging which permits identification and classification of the materials used by all of the agencies.  There have been 17 unrelated systems of property identification in use at one time.  This situation has resulted in the development of costly duplicating inventories throughout the Government.
   Since the recent war, the national Military Establishment has made some progress toward a coordinated system of property identification and the Bureau of Federal Supply is now cooperating in this endeavor.  Nevertheless, a declaration of congressional policy insisting upon a Federal commodity catalog is necessary to insure conformity of some of the old-line civilian agencies and to insure continued military-civilian cooperation.

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7.  Property Utilization

   Agencies have devoted far too little attention to effecting needed economies through maximum use of personal property.  Some agencies maintain no property controls and numerous agencies have not inventoried their property in years.  Other agencies have costly record systems which are not adapted to assisting management in obtaining full utilization.
   The failure to provide adequate inventory procedures and property records has resulted in the accumulation of large inventories of surplus property.  By continuing to store such property, these agencies are building up excess storage and handling costs as well as permitting the property to depreciate.

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