A-73422, MAY 2, 1936, 15 COMP. GEN. 951

A-73422: May 2, 1936

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CONTRACTS - STATISTICAL TABULATIONS - SECURITIES AND EXCHANGE COMMISSION THERE IS NO AUTHORITY FOR THE SECURITIES AND EXCHANGE COMMISSION TO ENTER INTO CONTRACT WITH A PRIVATE AGENCY FOR THE PERFORMANCE OF STATISTICAL DUTIES WITH WHICH THE COMMISSION IS CHARGED MERELY BECAUSE OF INSUFFICIENCY OF PRESENT STATISTICAL PERSONNEL. - "THE COMMISSION IS AUTHORIZED AND DIRECTED TO MAKE A STUDY OF THE FUNCTIONS AND ACTIVITIES OF INVESTMENT TRUSTS AND INVESTMENT COMPANIES. THE INFLUENCE EXERTED BY SUCH TRUSTS AND COMPANIES UPON COMPANIES IN WHICH THEY ARE INTERESTED. VARIOUS TYPES OF QUESTIONNAIRES HAVE BEEN SENT OUT TO COMPANIES WHICH COME WITHIN THE PROVISIONS OF THIS SECTION. AFTER THE COMPLETED QUESTIONNAIRES ARE RETURNED TO THE COMMISSION PLANS MUST BE DEVISED FOR THE EXTRACTION OF A GREAT VOLUME OF STATISTICAL DATA CONTAINED THEREIN.

A-73422, MAY 2, 1936, 15 COMP. GEN. 951

CONTRACTS - STATISTICAL TABULATIONS - SECURITIES AND EXCHANGE COMMISSION THERE IS NO AUTHORITY FOR THE SECURITIES AND EXCHANGE COMMISSION TO ENTER INTO CONTRACT WITH A PRIVATE AGENCY FOR THE PERFORMANCE OF STATISTICAL DUTIES WITH WHICH THE COMMISSION IS CHARGED MERELY BECAUSE OF INSUFFICIENCY OF PRESENT STATISTICAL PERSONNEL, THE APPROPRIATIONS FOR SAID COMMISSION SPECIFICALLY PROVIDING FOR RENTAL OF EQUIPMENT AND EMPLOYMENT OF NECESSARY PERSONNEL.

COMPTROLLER GENERAL MCCARL TO THE CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION, MAY 2, 1936:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER OF APRIL 3, 1936, AS FOLLOWS:

SECTION 30 OF TITLE I OF THE PUBLIC UTILITIES ACT OF 1935 PROVIDES AMONG OTHER THINGS THAT---

"THE COMMISSION IS AUTHORIZED AND DIRECTED TO MAKE A STUDY OF THE FUNCTIONS AND ACTIVITIES OF INVESTMENT TRUSTS AND INVESTMENT COMPANIES, THE CORPORATE STRUCTURES, AND INVESTMENT POLICIES OF SUCH TRUSTS AND COMPANIES, THE INFLUENCE EXERTED BY SUCH TRUSTS AND COMPANIES UPON COMPANIES IN WHICH THEY ARE INTERESTED, AND THE INFLUENCE EXERTED BY INTERESTS AFFILIATED WITH THE MANAGEMENT OF SUCH TRUSTS AND COMPANIES UPON THEIR INVESTMENT POLICIES, AND TO REPORT THE RESULTS OF ITS STUDY AND ITS RECOMMENDATIONS TO THE CONGRESS ON OR BEFORE JANUARY 4, 1937.'

VARIOUS TYPES OF QUESTIONNAIRES HAVE BEEN SENT OUT TO COMPANIES WHICH COME WITHIN THE PROVISIONS OF THIS SECTION. AFTER THE COMPLETED QUESTIONNAIRES ARE RETURNED TO THE COMMISSION PLANS MUST BE DEVISED FOR THE EXTRACTION OF A GREAT VOLUME OF STATISTICAL DATA CONTAINED THEREIN, AND THE ASSEMBLY, COORDINATION, AND TABULATION OF THIS STATISTICAL INFORMATION. THE ANALYSES OF THIS DATA WILL HAVE A VERY IMPORTANT BEARING ON AND WILL BE USED TO A GREAT EXTENT IN THE DRAFTING OF THE REPORT TO CONGRESS.

IN VIEW OF THE VOLUME OF DETAIL WORK INVOLVED AND THE FACT THAT THE STATISTICAL TABULATIONS WILL HAVE TO BE COMPLETED WITHIN THE NEXT THREE OR FOUR MONTHS IN ORDER TO HAVE THEM AVAILABLE FOR FURTHER STUDY IN CONNECTION WITH THE DRAFTING OF THE REPORT WHICH IN TURN WILL HAVE TO BE SUBMITTED TO CONGRESS ON OR BEFORE JANUARY 4, 1937, THERE APPEARS TO BE BUT ONE POSSIBLE METHOD OF ACCOMPLISHING THE PROJECT, NAMELY, BY ENTERING INTO AN AGREEMENT WITH THE INTERNATIONAL BUSINESS MACHINE CORPORATION, OR ANY OTHER COMPANY HAVING FACILITIES FOR THE ACCOMPLISHMENT OF THE TASK, TO PUNCH, SORT, AND TABULATE CARDS CONTAINING THE INFORMATION EXTRACTED FROM THE QUESTIONNAIRES.

WE HAVE ALREADY CONTACTED THE VARIOUS AGENCIES IN THE DISTRICT OF COLUMBIA WHICH MIGHT HAVE THE FACILITIES OF ACCOMPLISHING THIS TASK, AND FIND THAT THE INTERNATIONAL BUSINESS MACHINE CORPORATION IS THE ONLY COMPANY WHICH HAS THE FACILITIES FOR TABULATING THIS INFORMATION. ACCORDINGLY, IT APPEARS THAT IT IS THE SOLE SOURCE OF SUPPLY FOR THIS SERVICE. IN VIEW OF THIS FACT WE HAVE FURTHER NEGOTIATED WITH THE INTERNATIONAL BUSINESS MACHINE CORPORATION WITH A VIEW TO ASCERTAINING THE SORT OF CONTRACT WHICH THEY WOULD MAKE WITH THIS COMMISSION FOR THE ACCOMPLISHMENT OF THE PROJECT. A COPY OF THE PROPOSED CONTRACT WHICH THEY ARE WILLING TO ENTER INTO IS SUBMITTED HEREWITH.

ANOTHER POINT WHICH MUST BE EMPHASIZED IN CONNECTION WITH THE QUESTION OF SOLE SOURCE OF SUPPLY FOR THIS SERVICE IS THE FACT THAT THE COMMISSION NOW HAS A TABULATING MACHINE UNIT IN WHICH PERIODIC STATISTICAL AND INFORMATIVE REPORTS ARE TABULATED BY USE OF INTERNATIONAL BUSINESS MACHINES. THE CARDS WHICH WILL BE PUNCHED, SORTED, AND TABULATED FOR THIS INVESTMENT-TRUST PROJECT, UPON COMPLETION OF THE TASK BY THE COMPANY INVOLVED, WILL BE TURNED OVER TO THE COMMISSION AND THEY WILL BE THE PROPERTY OF THE COMMISSION. IT IS NATURAL TO ASSUME THAT FROM TIME TO TIME WE WILL WANT TO MAKE ADDITIONAL RUNS OF THESE CARDS ON THE TABULATING MACHINES IN ORDER TO SECURE ADDITIONAL INFORMATION OR BRING EXISTING INFORMATION UP TO DATE. IT IS THEREFORE EXTREMELY IMPORTANT THAT THE CARDS FOR THIS PROJECT BE PUNCHED, SORTED, AND TABULATED ON INTERNATIONAL BUSINESS MACHINES.

THE REASON FOR MAINTAINING THAT THIS PROJECT MUST BE PERFORMED, IF TO BE DONE AT ALL, ON A CONTRACT BASIS BY AN OUTSIDE AGENCY IS THAT THE TABULATING EQUIPMENT AND THE TABULATING PERSONNEL NOW USED BY THE COMMISSION IS ENGAGED UPON A FULL-TIME BASIS IN THE PREPARATION OF PERIODIC REPORTS AND STATEMENTS WHICH MUST BE DISSEMINATED BY THE COMMISSION. THE PRESENT EQUIPMENT AND PERSONNEL COULD NOT PERFORM THE ADDITIONAL WORK WHICH WOULD BE INVOLVED IN THIS PROJECT. THE ADDITIONAL WORK IS OF SUCH A TEMPORARY NATURE AND THE TIME ELEMENT IS SO IMPORTANT THAT UNDUE HARDSHIPS WOULD BE INVOLVED IF WE WERE COMPELLED TO RENT ADDITIONAL EQUIPMENT AND EMPLOY AND TRAIN TEMPORARY PERSONNEL FOR THE ACCOMPLISHMENT OF THIS TASK.

IN VIEW OF THE ABOVE A DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER OR NOT THIS COMMISSION HAS AUTHORITY TO ENTER INTO THE CONTRACT AFOREMENTIONED.

THE APPROPRIATION FOR YOUR COMMISSION IN THE INDEPENDENT OFFICES APPROPRIATION ACT APPROVED FEBRUARY 2, 1935 (49 STAT. 14), FOR THE FISCAL YEAR 1936, PROVIDES:

FOR FIVE COMMISSIONERS, AND FOR ALL OTHER AUTHORIZED EXPENDITURES OF THE SECURITIES AND EXCHANGE COMMISSION IN PERFORMING THE DUTIES IMPOSED BY LAW OR IN PURSUANCE OF LAW AND FOR OTHER PERSONAL SERVICES, INCLUDING EMPLOYMENT OF EXPERTS WHEN NECESSARY; CONTRACT STENOGRAPHIC REPORTING SERVICES; SUPPLIES AND EQUIPMENT; PURCHASE AND EXCHANGE OF LAW BOOKS, BOOKS OF REFERENCE, DIRECTORIES, PERIODICALS, NEWSPAPER AND PRESS CLIPPINGS; TRAVEL EXPENSES, INCLUDING THE EXPENSE OF ATTENDANCE, WHEN SPECIFICALLY AUTHORIZED BY THE COMMISSION, AT MEETINGS CONCERNED WITH THE WORK OF THE SECURITIES AND EXCHANGE COMMISSION; GARAGE RENTAL; FOREIGN POSTAGE; MILEAGE AND WITNESS FEES; RENT OF QUARTERS OUTSIDE THE DISTRICT OF COLUMBIA; RENTAL OF EQUIPMENT; AND OTHER NECESSARY EXPENSES; $2,234,494: PROVIDED, THAT SECTION 3709 OF THE REVISED STATUTES (U.S.C., TITLE 41, SEC. 5) SHALL NOT BE CONSTRUED TO APPLY TO ANY PURCHASE OR SERVICE RENDERED FOR THE SECURITIES AND EXCHANGE COMMISSION WHEN THE AGGREGATE COST INVOLVED DOES NOT EXCEED THE SUM OF $50.

FOR ALL PRINTING AND BINDING FOR THE SECURITIES AND EXCHANGE COMMISSION, $30,000.

TOTAL, SECURITIES AND EXCHANGE COMMISSION, $2,264,494.

SECTION 31 OF TITLE I OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 (49 STAT. 837), FOLLOWING THE PROVISION QUOTED IN YOUR SUBMISSION, CONTAINS THE FOLLOWING:

FOR THE PURPOSES OF THIS TITLE, THE COMMISSION MAY SELECT, EMPLOY, AND FIX THE COMPENSATION OF SUCH ATTORNEYS, EXAMINERS, AND OTHER EXPERTS AS SHALL BE NECESSARY FOR THE TRANSACTION OF THE BUSINESS OF THE COMMISSION IN RESPECT OF THIS TITLE WITHOUT REGARD TO THE PROVISIONS OF OTHER LAWS APPLICABLE TO THE EMPLOYMENT AND COMPENSATION OF OFFICERS OR EMPLOYEES OF THE UNITED STATES; AND THE COMMISSION MAY, SUBJECT TO THE CIVIL-SERVICE LAWS, APPOINT SUCH OTHER OFFICERS AND EMPLOYEES AS ARE NECESSARY IN THE EXECUTION OF THE FUNCTIONS OF THE COMMISSION AND FIX THEIR SALARIES IN ACCORDANCE WITH THE CLASSIFICATION ACT OF 1923, AS AMENDED.

THE SUPPLEMENTAL APPROPRIATION ACT, FISCAL YEAR 1936, APPROVED FEBRUARY 11, 1936 (49 STAT. 1113), PROVIDES AN ADDITIONAL APPROPRIATION OF $750,000 FOR SALARIES AND EXPENSES OF THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE SAME OBJECTS SPECIFIED IN THE INDEPENDENT OFFICES APPROPRIATION ACT FOR 1936, AND IN ADDITION THERETO RENTAL OF QUARTERS IN THE DISTRICT OF COLUMBIA AND AN ADDITIONAL SUM FOR PRINTING AND BINDING.

SECTION 30 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, QUOTED ABOVE, CHARGES THE COMMISSION WITH THE DUTY OF MAKING STUDIES THEREIN REQUIRED AND INCORPORATING SUCH STUDIES IN A REPORT TO THE CONGRESS, AND SECTION 31 AUTHORIZES THE COMMISSION TO EMPLOY SUCH PERSONNEL AS MAY BE NECESSARY FOR CARRYING OUT SUCH PURPOSES. THE APPROPRIATIONS PROVIDE FOR THE PURCHASE OR RENTAL OF EQUIPMENT, AND FOR THE EMPLOYMENT OF THE NECESSARY PERSONNEL AND DOUBTLESS CONTEMPLATED THE PERFORMANCE OF ALL DUTIES UNDER SECTION 30 TO BE PERFORMED BY THE REGULAR EMPLOYEES OF THE COMMISSION. IT APPEARS FROM YOUR SUBMISSION THAT YOU HAVE ALREADY ESTABLISHED A UNIT QUALIFIED TO PERFORM THE DESIRED TABULATION WORK, EXCEPT FOR THE FACT THAT IT IS ENGAGED UPON OTHER TABULATION DUTIES. THE INSUFFICIENCY OF THE PRESENT PERSONNEL IN A GOVERNMENT ESTABLISHMENT WITHIN THE DISTRICT OF COLUMBIA DOES NOT AUTHORIZE CONTRACTING WITH A PRIVATE AGENCY FOR THE PERFORMANCE OF DUTIES WITH WHICH THE GOVERNMENT AGENCY IS OTHERWISE CHARGED. AS INDICATED ABOVE, THERE APPEARS AMPLE AUTHORITY IN THE APPROPRIATION TO RENT ADDITIONAL TABULATING MACHINES AND TO EMPLOY THE NECESSARY PERSONNEL. ANSWERING YOUR QUESTIONS SPECIFICALLY, I HAVE TO ADVISE THAT THE PROPOSED CONTRACT IS NOT AUTHORIZED.