Mr. LODGE. Now, of course, I do not particularly care what agency is responsible for this, but I am interested in the ultimate effect on the taxpayer, and whether this gentleman's agency manages to pass it over to another agency does not seem to me to be important. Mr. KURTH. The Bureau of Federal Supply is the agency which purchases civilian goods for the United States in general. Mr. LODGE. I see. Then it would be all funneled through them. Mr. KURTH. Except for the Federal Printing Office, which handles paper and printing supplies of various kinds, and those would be the two principal agencies. Mr. LODGE. The Bureau of Federal Supply, then, is the procurement agency for the Treasury Department; is that correct? Mr. KURTH. It is a part of the Treasury Department, but I would say it is the civilian procurement agency for the U.S. Government. Mr. LODGE. I am very glad to have that on the record, Mr. Chairman. Mr. SMITH. Yes. SPECIFIC SUPPLIES TO BE PROCURED THROUGH U.S. Now, I would like to have for the sake of the record an enumeration of what the bill contemplates in the way of supplies. Can you furnish us a complete list of the things which you think that this bill authorizes the Government to purchase? Mr. KURTH. I would like to make a suggestion there. Of course, it is our intention only to furnish what we normally call administrative supplies office machinery, paper, the normal office supplies of various kinds, automobiles, and those things necessary to make an organization a going concern. We have even furnished the United Nations, I believe, some foodstuffs for operation of their cafeterias. Is that right, Mr. Witt? Mr. Albrecht. Mr. ALBRECHT.19 That is correct. Mr. LODGE. If this bill goes through with this section 4, then, concerning the construction of the United Nations headquarters and you were requested to furnish construction materials in New York, would you also be in a position to do that? Mr. WITT. No. Mr. LODGE. You would not be in a position to do that? Mr. WITT. No, we would not contemplate any such volume as that without additional personnel. I think Mr. Kurth is right, that this is confined to administrative supplies, and not construction. Mr. LODGE. In other words, if this section 4 were to go in, you would have to engage a substantial additional number of personnel? Mr. WITT. Yes. Mr. LODGE. To handle that volume of business? Mr. WITT. Yes, sir. Mr. LODGE. That is why, Mr. Chairman, I thought it important to separate those two items. Mr. SMITH. I agree with you. 19 Mr. Albrecht of the Bureau of Federal Supply had accompanied Mr. Witt to the hearing. COST FACTOR Mr. LODGE. And it seems to me-and of course I realize that the United Nations can go ahead with construction outside of this legislation-but I think it is important for us to go into that particular section a little more deeply. I would like to return for one minute, Mr. Witt, to the question of costs outside of that section. As I understand it, it would involve no additional personnel, and there would be no additional cost there, and on the basis of this surcharge system, any additional administrative expenses would be absorbed by the United Nations fund? Mr. WITT. Yes, sir. Mr. LODGE. So that there would be no cost to the taxpayer provided the articles delivered were not delivered at a loss? Mr. WITT. Yes, sir. Mr. LODGE. And it would be your practice not to deliver these articles at a loss? Mr. WITT. No, sir, we would not. Mr. LODGE. You would deliver them at cost, in order to provide an inducement to the United Nations to purchase them from you; is that correct? Mr. WITT. Not at cost; cost plus a surcharge. Mr. LODGE. It would nevertheless be cheaper than for them to purchase it? Mr. WITT. Yes. Mr. LODGE. So that a saving to the taxpayer would be effected through U.S. contributions to the United Nations and no additional cost would ensue because of these purchases from the Bureau of Federal Supply; is that correct? Mr. WITT. That is correct. Mr. LODGE. I just want to get that clear on the record from the point of view of the cost to the taxpayer. HIGH VOLUME, LOW COST Mr. KURTH. The Bureau of Federal Supply, I might say, has many supply contracts, thousands of them, which every Federal agency can order direct, and of course, through its warehouse system, it stocks the more common items. Now, the great volume of purchasing done by the U.S. Government results in very great savings. For example, sparkplugs, which normally cost about 85 cents retail, may be purchased in volume for as low as 19 cents. Light bulbs, for example, and common items of that character— now, the greater volume of purchasing, of course, means reduced costs to the United Nations and to these organizations. In that sense, indirectly, it is a saving to the United States, because for every dollar they save, we save 45 cents. Mr. LODGE. You understand, Mr. Kurth, what I am interested in is the net effect on the taxpayer. Mr. KURTH. I understand that thoroughly. AN AMERICAN SAVINGS AND AN INTERNATIONAL COURTESY Mr. LODGE. And I think it is very important from the point of view of this Congress that that be elaborated in detail and in full-the volume in connection with this measure-in order that the Congress shall be well aware of the fact that by this legislation we were in effect saving money for the taxpayers. It seems to me that that is one of the most vital aspects of this legislation, Mr. Chairman. Mr. SMITH. I think so. Mr. KURTH. That is the most important factor; and second, the other matter that I think should be gone into, is the matter of international courtesy, or convenience, if you want to call it that. Other countries do this same thing for these organizations when they are located in their particular countries. Mr. LODGE. And surely as the Budget Officer of the State Department you would agree with me that if we can be courteous at a saving to ourselves, it certainly is a very happy circumstance. Mr. KURTH. That is a consummation devoutly to be wished, yes. CONSTRUCTION AND SECTION 4 Mr. SMITH. I understand that as far as your position with regard to these two forms of the bill is concerned, the matter of procuring this for the United Nations is desirable or not? Would you have it included, or would you have section 4 omitted from the bill? Mr. KURTH. When this bill was originally drafted, it was not contemplated that we would go into any large-scale projects such as construction or anything of that character. Mr. SMITH. It was not my thought, either, I might say for the record. Mr. MARSHALL. I may say for the purposes of the record, that investigating all this further at the committee's instance, I found out the possibility of construction materials, I believe in conversation with Mr. Kaplan,20 who is present this morning, and I wrote it as a separate section which is easily omitted from the legislation in case it is not considered germane in the present circumstances. Mr. KURTH. May I ask this question: Would you not have to pass the other bill, authorizing the construction project, before you put it in this legislation? Mr. LODGE. I would say no. Mr. KURTH. You make this general? HEADQUARTERS AGREEMENT AND BUILDING START Mr. LODGE. I would say the United Nations has a right to go ahead now in construction, has it not, Mr. Marshall? Mr. MARSHALL. With the proviso that the status of this construction has not been worked out. Mr. LODGE. Has not been ratified. Mr. MARSHALL. Until we ratify the headquarters agreement; such legislation is before the Congress at the present time. And the question "Mr. Sheldon Z. Kaplan, Assistant to the Legal Adviser, Department of State. in another connection was raised the other day by you as to what the effect of a failure to ratify the headquarters agreement would have on construction, and it was said-well, probably it would have an inhibitive effect. Mr. LODGE. Even though it did not specifically provide for the construction. My point is that technically and legally speaking, the United Nations has today the right to go ahead and do the construction of the United Nations building on the Rockefeller site in New York City. Is that not correct? Mr. MARSHALL. I would rather pass that question to somebody from the State Department. I was giving you my guess on the question, but for purposes of clarification, I will refer it to them. Mr. LODGE. Mr. Kurth is on the question. Mr. KURTH. Answering Mr. Smith's question, again from the standpoint of the overall policy in assisting the United Nations to get a permanent home in the United States, [of] doing everything possible that this country can do to help them, I would say that the inclusion of that part of the legislation is desirable from that standpoint, and since, of course, in this construction, we will again probably pay at least 40 percent of it, I think it would be indirectly a saving to the American taxpayer. PRIVATE ENTERPRISE AND U.N. CONSTRUCTION Mr. LODGE. You think that the Government can construct more cheaply than private enterprise? Mr. KURTH. No, I do not say that. Mr. LODGE. Then how would it be a saving to the American taxpayer? Mr. KURTH. We can buy construction materials probably more cheaply than private enterprise. Private enterprise, of course, would build this building. It would be done on a contract, I am quite sure. Mr. LODGE. But you could provide the materials to private enterprise, and thereby effect a saving to the taxpayer with respect to the taxpayer's contribution to the construction of this building; is that correct? Mr. KURTH. I think that is correct, yes. Mr. LODGE. But you are not sure? Mr. KURTH. No, I am not sure. I would sooner let Mr. Witt pass on that technical purchasing problem. Do you want to answer that, Mr. Witt? Mr. WгTT. I do not believe that I could answer that question affirmatively. CONCERN FOR U.S. TAXPAYER Mr. LODGE. I think that is important, because, Mr. Witt, if the inclusion of section 4 does not mean a saving to the taxpayer, then it must probably mean a loss to the taxpayer-because it is very rare in life that you find that there is neither a profit nor a loss-and if it is a loss to the taxpayer, then I think we should consider the matter very seriously before we include it in this measure. It is not our purpose here in this committee to increase the taxpayer's burden with respect to the United Nations without going into it very deeply. Mr. WITT. I say normally we should buy better than the average contractor. We are buying in aggregate, and we are buying steel and all the component parts of the building, but how you work out with your combined construction contract, I am not at all certain. Mr. SMITH. As a matter of fact, you have not given this matter much consideration from that angle, have you? Mr. WITT. No, sir, not at all. Mr. SMITH. I do not think he is in a position to testify. Mr. LODGE. I think that is true, Mr. Chairman, and rather than just decide that we eliminate this from the bill when we are not sure of the advisability of it, I suggest, Mr. Chairman, that it would be in order for the committee to be further informed in detail with respect to this matter. Mr. SMITH. I think that is highly desirable. I think it is necessary. U.S. GOVERNMENT AS UNDERWRITER OF U.N. CONSTRUCTION I would like to ask Mr. Kurth this question: Does it not mean, so far as the erection of this building is concerned, that we practically underwrite the cost of it originally with the idea that we are to be reimbursed later on for whatever money goes into it? We are actually underwriting the project, are we not? Mr. KURTH. I think that is a correct statement. Mr. SMITH. Has the Department considered that cost to the extent of underwriting it in dollars and cents? Mr. KURTH. Mr. Kaplan, you have been working on that. Do you want to testify on that question? I am not too familiar with it. Mr. SMITH. I would like your statement as to whether or not you would consider the extent in dollars and cents of our underwriting the erection of that building? STATEMENT OF SHELDON Z. KAPLAN, ASSISTANT TO THE LEGAL ADVISER, DEPARTMENT OF STATE Mr. KAPLAN. I think, Mr. Chairman, that is a problem that has been gone into, or probably will be gone into in connection with the permanent headquarters agreement. However the provision with regard to construction that was placed in the proposed bill by Mr. Marshall simply contemplates that there may be certain construction materials that will not be available from private sources and may be easily obtainable through Government sources, or may be obtainable more cheaply through Government sources. However, the chief need, as Mr. Kurth has explained, is with regard to the administration of the particular international organization involved. Mr. SMITH. The thing that I am fearful of is that if we passed this legislation in its present form as far as that project is concerned, we are laying ourselves open to underwriting the whole project. Now, if there is a limitation in the mind of the Department as to restricting our activity in that direction, I think we ought to have something in the record stating specifically just what that is. Mr. LODGE. Mr. Chairman, may I comment on that? |