specify how the rental rates were to be determined, and the draft bill would provide a basis for such determinations.

Section 407 (a) of the act of August 20, 1957 (42 U.S.C. 1594j), authorizes the rental of inadequate public quarters to members of the uniformed services, and provides that such personnel will be paid an adjusted quarters allowance amounting to the net difference between (1) the fair rental value of the inadequate quarters, and (2) their basic allowance for quarters. The section provides that it shall be administered under regulations approved by the President. These regulations have been issued by the heads of the departments concerned, after approval by the Director of the Bureau of the Budget, under a delegation of authority from the President in Executive Order No. 10766, dated May 1, 1958. In addition to setting standards of adequacy, these regulations prescribe methods of setting "fair rental value" on the same basis as required by Budget Circular No. A-45. The bill would permit these housing rentals to be fixed under the proposed Government-wide regulations which the President would be authorized to prescribe.

The bill would also permit the President to issue regulations to provide a similar basis for the determination of charges for household furniture and equipment, utilities, subsistence, and laundry service, where such items are authorized to be supplied by the Government.

The draft bill also contains a prohibition against employees being required to occupy Government rental quarters unless a determination has been made that necessary service cannot be rendered or property of the United States cannot be adequately protected otherwise. Such a prohibition has appeared in annual appropriation act provisions in recent years.

Mr. OLSEN. We will call as the first witness Mr. Carl Tiller of the Bureau of the Budget, Office of Budget Review.

Mr. Tiller, if it is agreeable with you, we will put your statement in full in the record.

PREPARED STATEMENT OF CARL W. TILLER, OFFICE OF BUDGET REVIEW, Bureau of THE BUDGET

Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before you to discuss S. 1833, a bill to authorize Government agencies to provide quarters, household furniture and equipment, utilities, subsistence, and laundry service to civilian officers and employees of the United States, and for other purposes.

The bill you are considering today is one which was first proposed by the Bureau of the Budget in 1960 for the purpose of perfecting the existing law which authorizes the Government to provide its employees with quarters and related facilities where this is necessary, and to make reasonable charges for the quarters and facilities it does provide.

A bill for this purpose-S. 3486, 86th Congress-was passed by the Senate on June 14, 1960. It did not get House action before that Congress adjourned. In the 87th Congress, the House passed such a bill on August 21, 1961 (then H.R. 7021), but the Senate did not act on it.

This current version, which differs from the earlier bills in minor respects which I will touch upon in a moment, was passed by the Senate on January 23 of this year. We are therefore most pleased that your subcommittee is giving consideration to the bill. It is our hope that we will see favorable action completed in this session.

While this legislation might be regarded by some as merely a "housekeeping" measure, it is nonetheless rather important housekeeping. The rents and other charges being made for quarters and other services necessarily provided in support of Government programs are in the range of $65 million to $75 million annually. The equitable administration of these charges throughout the Government has been a matter of concern not only to us, but to the General Accounting Office, as well. The matter of inadequate or inequitable charges has been a subject of several audit reports by the Comptroller General in recent years. This bill will provide a sound basis in clearly stated law to better enable the executive branch to administer the principle of equitable charges.

The present law sets the standard of "reasonable value" for determining the rental rates, but leaves open to varying interpretations the meaning of those words. The Bureau of the Budget some years ago issued its Circular No. A-45

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to provide a basis for interpreting those words. We believe that reasonable value is normally to be measured by the test of comparability-what the employee would pay for comparable quarters on the open market. The rates should be fair to both the employee and the Government, and should also maintain fairness between the employee in Government quarters and the employee who is in private quarters. The proposed bill more directly fills the need for providing an authoritative interpretation of the law by authorizing the President to issue regulations as appropriate.

The bill would modernize the wording of the 1928 law. For example, the present law states that the value of the facilities and services being provided is to be considered in fixing the employee's salary rate. Actually the salary rate and earnings are not affected by the rentals, but the value of the rental is de ducted from earnings in arriving at take-home pay. This would be cleared up by the bill under consideration.

Another kind of situation is overlooked in existing law. It does not specifically cover the case of employees of Government contractors occupying Government quarters or being furnished electricity and other facilities and services. We believe the same principle as is applicable to Government employees is applicable in such cases. Similar problems of lack of clarity sometimes exist when members of the uniformed services occupy Government-provided rental quarters instead of "public quarters" or their own privately obtained housing.

Another gap in the present law relates to a matter on which the Congress took a very clear position, but which is not in permanent law. Appropriation acts for 1956 through 1959 carried language to limit the circumstances under which the head of a department or agency could require employees to occupy Government housing.

The specific wording last appeared as a part of section 208 of the appropriations act general provisions (Public Law 85-468), as follows: "Provided further, That, notwithstanding the provisions of any other law, no officer or employee shall be required to occupy any Government-owned quarters unless the head of the agency concerned shall determine that necessary service cannot be rendered or property of the United States cannot be adequately protected otherwise."

Section 208 was dropped on recommendation of the executice branch in the 1960 appropriation acts. The Director of the Budget reported to the Congress at that time (January 30, 1959) that "legislation will be proposed to Congress shortly to clarify the basic laws on this subject and to provide specifically and on a permanent basis" for the issuance of regulations to continue the existing policy. This bill would accomplish that. The protection afforded the employee by the quoted provision would again be placed in the law.

The bill would not otherwise create any new policy, nor would it modify any provisions of law that the Congress has consistently demonstrated it intends to apply. For example, it retains, and even reinforces, the principle that a reasonable value would be placed upon the quarters, facilities, or services which the Government provides, and that reasonable charges would be made to those who receive them. The system of providing public quarters to members of the uniformed services, or allowances provided in lieu of public quarters, would not be changed. The laws authorizing quarters and related services to be provided without charge in foreign countries would remain as they are.

I referred earlier to the changes that appear in S. 1833, as passed in the Senate this year in comparison with the version passed by the House during the sessions of the 87th Congress. There are two of these: Wording has been added in consultation with the General Accounting Office, for the purpose of making certain that the disposition of the proceeds of rents and other charges would not be inadvertently modified. Budgets of the various agencies contemplate a continuation of the present disposition of the receipts. The second change was brought about by the passage of the Overseas Differentials and Allowances Act of September 6, 1960 (5 U.S.C. 3032). That law covered the authority for providing quarters in the Trust Territory of the Pacific, enabling us to remove the reference to the territory as it appeared in the old H.R. 7021.

One final matter. The committee staff has made available to us a committee print dated May 27 which would recast the bill in a style that conforms more closely with that used in other recent legislation. We believe the committee print is an improvement on our earlier version, with one exception. The new draft would remove the Tennessee Valley Authority from coverage of this legislation. We do not believe there is a sound basis for excepting one agency from such Government-wide legislation. We were informed of the TVA's belief

that they have sufficient authority now in this area and that there is no need for their inclusion in this bill. However, we have been unable to learn of any harm that would come to them by their inclusion. In our judgment, Government-wide legislation ought to provide exceptions only where fully justified.

We would be concerned about the rewrite of the bill if it causes further delay in the Senate, which has already passed the bill this year. We have not had any difficulty with the bill since we first proposed it, except for the always crowded calendar. You, of course, are better judges than we of the likelihood of additional Senate action this year. We urge that S. 1833 be favorably considered, either in its original form or its amended form, but we are anxious to obtain enactment this year.

Mr. TILLER. The bill you are considering today was first proposed by the Bureau of the Budget in 1960. It was passed by the Senate that year, but the House did not get to act on it in that Congress. In the succeeding Congress, the House passed a similar bill, but the Senate did not get to act on it. This year, the Senate passed the bill and it is now before the House and your subcommittee for action.

Mr. WALLHAUSER. With this lack of enactments, what is the status of the authority you ask for?

Mr. TILLER. We are not really asking basically for new authority, but to clarify a number of old existing statutes.

There is one provision in the bill which is not presently in the law. It is one on which I think other witnesses will also be testifying that would reenact a provision contained in appropriation acts for 4 successive years. It is a provision that

no officer or employee shall be required to occupy any Government-owned quarters unless the head of the agency concerned shall determine that necessary service cannot be rendered or property of the United States cannot be adequately protected otherwise.

This provision was dropped from the appropriation acts after the 1959 act on the premise that we would get permanent legislation of the type we are seeking. Therefore, the enactment of this bill will put that provision back into the law. Otherwise, the enactment of the bill will primarily serve to clarify existing law and fill in some gaps, but it will not make any significant change in policy.

Mr. WALLHAUSER. Supposing now you brief for us what the legislation proposes to do.

Mr. TILLER. The proposed legislation will clarify and restate the law pertaining to the provision of quarters and related services for employees which was last contained in a 1928 statute, which is somewhat out of date. The 1928 statute, for example, says that the value of the facilities and services will be considered in fixing the employee's salary rate, which is a rather old-fashioned way of saying it. Now we would say the salary is determined in accordance with the normal compensation laws and the value of the quarters will be deducted. from his salary in arriving at take-home pay.

The bill will clarify the applicability of the same principle. When Government provides others with quarters, where necessary, it can charge a reasonable value. This applies in the case of employees of Government contractors who occupy Government quarters at construction sites and other operating situations.

The bill will also provide in the case of quarters occupied by military personnel on a rental basis that the same basic principle of reasonable value will be applied. In all of these cases, we will construe "reasonable value" to mean that the employee should pay through

salary deduction, or otherwise, approximately the same amount as he would pay if he were obtaining quarters privately instead of from the Government. We ought not to make a profit at his expense. He ought not to be subsidized by us. It is also fair as between employees who occupy Government quarters and those who must occupy private quarters. The person in Government quarters ought neither to be charged more than he would pay otherwise, nor should he come off with a better result than the employee who is in nongovernment quarters. We believe the bill, therefore, will provide a clear statutory basis for providing quarters and for making charges.

One other aspect I should mention is that the bill would authorize the President to issue regulations for the interpretation and enforcement of the principles. This, of course, is similar to provisions contained in the laws pertaining to travel, those pertaining to employee uniforms and a good many other subjects where it is desirable to have Government-wide regulations to provide further interpretation and application of the principle which Congress places in the statute.

The committee staff has furnished us with a committee print showing a possible redrafting of the bill to place the language in a format which more nearly resembles the format now often used for bills of this type. We believe that the committee print is an improvement on our earlier version, with one exception. The new draft would remove the Tennessee Valley Authority from coverage by this legislation. We do not believe there is a sound basis for excepting one agency from i such Government-wide legislation. In our judgment, legislation of this type ought to provide exceptions only where they are fully justified.

We would be concerned about the rewrite of the bill if it causes further delay in the Senate, which has already passed the bill this year. We have not had any difficulty with the bill since it was first proposed several years ago except for the always crowded calendar.

You, of course, are better judges than we of the likelihood of additional Senate action this year.

In conclusion, we urge that S. 1833 be favorably considered, either in its original form, or in the amended form suggested by the committee staff, but we are anxious to obtain enactment this year. Mr. WALLHAUSER. Thank you very much.

Mr. OLSEN. We will now hear from Mr. John A. McCart.

STATEMENT OF JOHN A. McCART, ON BEHALF OF GOVERNMENT EMPLOYEES' COUNCIL, AFL-CIO

Mr. MCCART. Mr. Chairman and members of the subcommittee, the Government Employees' Council, representing 27 unions with membership in Federal agencies, desires to express its endorsement of the measure, which is the subject of this hearing.

The primary purposes of the proposal is to perfect and clarify existing laws governing provision of rental quarters, furniture, utilities, subsistence, laundry service, and related services to civilian employees.

Section 4 of S. 1833 is the primary point of interest of our council. It provides that no employee will be required to occupy federally owned or leased quarters, unless the head of an agency determines

that necessary service will be impaired or property cannot be adequately protected.

Similar language appeared in the Supplemental Appropriations Acts of 1953 and 1955. It was incorporated in the General Government Matters Appropriations Acts from 1956 through 1959 also. However, it was not included in the 1960 or 1961 statutes. The Budget Bureau felt agencies were complying well with is Circular No. A-45 governing charges to employees for quarters and other services. Circular No. A-45 contained no reference to the controlling language, which appeared in the earlier appropriations statutes.

During this period when no statutory safeguard existed against forcing employees to occupy Government quarters, workers were required to use military barracks. While there was nothing inherently wrong with the fact that the facilities were military, they were used also by military personnel. Many were in transit from one base to another or were arriving and departing for induction, discharge, or other missions. As a result, the civilian employees were unable to secure the rest necessary to carry on their assigned duties. Despite the fact that the employees objected to such assignments, their jobs required travel to service highly complex radio, radar, and related equipment. They were confronted with a "take it or leave it" attitude. Prior to these events, the employees involved were permitted to use motels or hotels in the vicinity, and were allowed the regular per diem rate applicable under the travel laws and regulations.

Apparently, the requirement to use military facilities was motivated by a desire to reduce the amount of money spent for civilian travel. Viewed from this standpoint, the funds were conserved at the expense of the civilian workers.

There has been no repetition of these incidents in the recent past. Yet, the fact that they occurred just a few years ago when the controlling language in the appropriation statutes and regulations was temporarily omitted leads to the inescapable conclusion that the policy enunciated in section 4 is essential to safeguard the equities of both military and civilian personnel.

These factors lead us to request favorable action on S. 1833 and to recommend especially retention of section 4 as it now appears in the bill.

The cooperation of the subcommittee in arranging this opportunity to offer our comments is deeply appreciated.

Mr. OLSEN. We will now hear from Mr. George Meagher.

STATEMENT OF GEORGE MEAGHER, ON BEHALF OF THE AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

Mr. MEAGHER. Mr. Chairman and members of the subcommittee, the bill S. 1833 would correct a situation that has caused inconvenience and hardship for many Federal employees. The change in Government policy it would bring about with respect to provision of quarters for civilian employees of the Federal Government is needed. The AFGE indorses the bill for the inequities it would correct and for the reason that it would benefit the Government as well through increased efficiency.

Many employees who must travel a great deal in the regular performance of their duties are required to occupy Government-owned