95th Congress COXXITTEE PRINT
REPORT ON MILITARY MEAT
PREPARED FOR THE
FEDERAL SPENDING PRACTICES AND OPEN
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
"1 -1 1 U
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE 21-658 WASHINGTON : 1978
For sale by the Superintendent of Documents U.S. Government Printing Office
Washington, D.C. 0402
COMMITTEE ON GOVERNMENTAL AFFAIRS
ABRAHAM RIBICOFF, Connecticut, Chairman
HENRY M. JACKSON, Washington CHARLES H. PERCY, Illinois
EDMUND S. MUSKIE, Maine JACOB K. JAVITS, New York
THO110AS F. EAGLETON, Missouri WILLIAM V. ROTH, JR., Delaware
LAWTON CHILES, Florida TED STEVENS, Alaska
SAM NUNN, Georgia CHARLES McC. MATHIAS, JR., Maryland
JOHN GLENN, Ohio JOHN C. DANFORTH, Missouri
JIM SASSER, Tennessee H. JOHN HEINZ III, Pennsylvania
MURIEL HUMPHREY, Minnesota RICHARD A. WEGMAN, Chief Counsel anad Staff Director PAUL HOFF, Counsel ELLEN S. MILLER, Professional Staff Member
ELI E. NOBLEMAN, Counsel THEODORE J. JACOBS, Counsel (Regulatory
PAUL C. ROSENTHAL, Counsel Reform
IRA S. SHAPIRO, Counsel JAMES M. GRAHAM, Counsel (Regulatory
CLAUDE E. BARFIELD, Professional Staff Reform)
Mem er ETHEL Z. GEISINGER, Special Assistant
CLAUDIA T. INGRAM, Professional Staff (Regulatory Reform)
MARILYN A; HARRIS, Executive Administrator and Professional Staff Me.nber ELIZABETH A. PREAST, Chief Clerk JOHN B. CHILDERS, Chief Counsel to the Minority BRIAN CONBOY, Special Counsel to the Minority CONSTANCE B. EVANS, Counsel to the Minority HAROLD C. ANDERSON, Staff Editor
SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT
LAWTON CHILES, Florida, Chairman
SAM NUNN, Georgia H. JOHN HEINZ, Pennsylvania
hENRY M. JACKSON, Washington JACOB K. JAVITS, New York
MURIEL H UMPHREY, Minnesota WILLIAM V. ROTH, JR., Delaware
RONALD A. CHIoDo, Chief Counsel and Staff Director ROBERT F. HARRIS, Deputy Staff Director ROBERT A. COAKLEY, Professional Staff CHRISTINE SHERIDAN BETTs, Chief Clerk NANCY C. ALDEN, Staff Assistant MARY MCAULIFFE, Minority Professional Staff EDWARD ROEDER, Professional Staff ITI)
LETTER OF TRANSMITTAL
COMMITTEE ON GOVERNMENTAL AFFAIRS,
SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN-\ GOVERNMENT, Washington, D.C.
Hon. ABRAHAM RIBICOFF,
Cha irmnan, Comm ittlee on Governmental Affairs, U.S. Senate Washington, D..
DEAR MR. CHAIRMAN: The Subcommittee on Federal Spending Practices began a major investigation into how the military buys meat for its personnel 21 months ago.
Thie investigation started when a meat packer alleged that the military's beef buying p)rogramn was not working. The issues he raised led the subcommittee to suspect that the military was being ripped off.
A subcommittee investigator subsequently stopped trucks transporting beef to Norfolk Naval Base, pulled random samples, and had the meat inspected. Our findings of foreign material-including a fly, flecks of metal, andl cowhide with hair-as well as grossly substandard meat, launched the investigation.
The discovery also prompted studies by the General Accounting Office, the Defense Department, and the Office of Federal Procurement Policy. At subcommittee request, the Department of Justice and Defense undertook a nationwide criminal investigation.
Our ivsiainled to criminal convictions o'f several persons who unscrupulously manipulated the system and ended with the implementation of government-wide food procurement reforms based on principles of competition and simplification.
In May of 1976 the subcommittee demonstrated in public hearings how a complete collapse of the military's procurement system enabled a taxpayer rip-off of millions of dollars. Young inspectors and plant employees gave up their fifth amendment rights to tell of bribery, fraud, inadequate training, and neglect by superiors in the chain of command. The public learned how a housewife in the supermarket could buy a similar cut of beef as the military for half the price. The witnesses knew the system was rotten. Their hope was that public exposure would bring change and eliminate the bad guys.
Our purpose was to demonstrate an actual example of how the Government could save money, prevent abuses and better meet its needs by adopting sound buying practices. This report ties together the two and a half year history of how the subcommittee turned a look at the military procurement of beef into government-wide reform of the way all our Federal agencies buy $3.5 billion of food annually.
As you know, the subcommittee is working to reform the laws controlling the way the Federal Government purchases $70 billion
of goods and services every year. Our objectives are to simplify and cut red tape in government -procurement and to replace present regulation by promoting more vigorous competition. I believe the Federal Acquisition bill, which the committee recently reported, will
-accomplish these goals. Enactment should enable billions of savings to the taxpayer while providing- better services.
The military meat investigation revealed on a microscopic scale, the same problems addressed by the Acquisition bill. While this investigation occasionally developed a dramatic life of its ow j; as when witnessess told of prostitutes and fraudulent tricks, or when indictments were issued, Senators were subpoenaed, convictions obtained and sentences passed, we never lost sight of our purpose to illustrate the important procurement principles involved.
Our findings were as follows:
No practical competition for military beef contracts existed. Out of some 2,500 meat packers in the country, often two or three packers were the only bidders and suppliers of a beef item to the military. Competition was not operating as a check on the system. The government relied on a few vendors to its own detriment.
SPECIFICATIONS TOO RIGID AND COMPLEX
Unnecessarily rigid and complex specifications prevented competition and drove prices up. Only a few vendors chose to invest the special equipment, time, and hassle involved to do business with the government.
NO ONE IN CHARGE
The "buck" did not stop anywhere for procurement decisions within the Department of Defense. Confused and fragmented lines of authority existed. No one was genuinely responsible, and within the various chains of command superiors who were told of abuses either ,did nothing or were rebuked when they took action.
Veterinary Corps personnel-directed since 1916 to be in charge of military mneat ins pection-were ill-trained and ill-sui ted to perform "~quality" inspections inside meat packing plants.
Criminal investigations of wrongdoings in the past had failed due to the bureaucratic complexity involved in prosecuting fraudulent
p ractices. Several vendors believed that they could act with impunity. Even if they were caught cheating, the government could not over-come its owN,1 bureaucracy. Tphe taxpayer was bilked of millions. The soldiers wevre fed tough "shioe leather" instead of the "choice" sirloin steaks the military had paid for-.
The subcommittee focus on the Boston meat scandal resulted in criminal convictions and penitentiary sentences. The scandal is over. A good examplt)e hias been set fors both potential cheaters and de-
mobilized government personnel who bel ieved nothing wNoidd ( ever happen to the cheaters. The Dep~artmlent of Defense alnd .iiistice are now better able to work together to identijfy aln(l piwosecute fraud.
In lpartflershil) with the app~rop~riationl commnhittees of the ( 1noIVr'Ih, the Officie of Federal Procurement Policy, nd, the executive branch, the subcommittee has worked for perml~anent (:olrect Cincs iU( TI e reforms undlertaken address food procurement by all the Competition among vendors for government contracts Is the be-st; single check on the system we cani provide. What follows are the governmnent-wi1e steps taken which should( introdu tce lbet ter comp'} eti tion in the marketplace from which the government buys,- foodI.
Thle Secretary of Agriculture now has responsibility and a program for managing a government-widle food specification system for foodI items. One federal specification, oriented. as closely as possible to commercial practices will be dlevelopedl and used by all federal agencies. The practice of different specifications for differ'ent agencies and unnecessarily rigid specifications will be eliminated. A marked increase in the number of companies participating in the government marketplace should result. I believe prices paid for food will drop.
The Secretary of Agriculture will be responsible for the quality of food bought by agencies of the federal government. (Except fish products, which will be handled by the National Marine Fisheries Service.) Veterinary Corps personnel will no longer provide domestic in-plant quality inspections for the Defense Department.
The Department of Agriculture will coordinate market information for agencies who procure food. Agencies should be better able to take advantage of "buyers" markets and avoid creating sellersr" markets by inadvertently acting against each other.
Mr. Chairman, the framework for reform is now in place. ThIe Office of Federal Procurement Policy is publicly committedI to evaluate the progress of these measures. The nationwide criminal investigation by the Justice Department continues.
The subcommittee has made additional recommendations to insure the objectives of the above reforms are achieved. Priority must be given by the Congress and the Executive branch to U.S.D.A.'s new responsibilities if additional scandals are to be avoided and we are to take full advantage of the efficiency opportunities presented.
While the active investigative role of the subcommittee on Federal Spending Practices and Open Government has ceased, our monitoring continues and we will report cost savings achieved as a result of these changes.
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TABLE OF CONTENTS
The Norfolk shipment----------------------------------- 2
The Jacksonville 3hpet-------------Initial steps Taken by the Defense Supply Agency ------------3
The General Accounting Ofie--------------4
Defense Supply Agency audit team results -------------------4
Justice and Defense Investigative 5evcs.~---Late 195-----------------------6
II. The Defense Department's procurement system for beef-------- 7
Planners and specification wie--------------7
1D0D procurement stm----------------10
III. Boston ivtiain--------------------11
IV. Haig-------------------------2 6
May7 10, 12, and 1-------------------26
September 21 and 2------------------30
V. Post 1976 atvte------------------------------33
The Office of Federal Procurement Policy--------A Second DoD aci.-----------------34
Nationwide criminal inetgto-------------35
D~oD Task Group and Army report f ollow-up---------35 Appropriations co3tt7
John Co3n7------------------VI. Fniganreomnain----------------38
Eliminate the barrier to competition -----------------------39
Make competition in the marketplace a goal ----------------40
Use marketplace sinl-----------------41
Consolidate responsibility for inspections-------------------42
Rethink how to identif y and prosecute crooks--------43
A. Letter from Senators Chiles and Weicker to Secr etary of Defense
Schlesinger requesting crime prevention survey, September 17,
B. Letter from Deputy Assistant Secretary of Defense, D. 0. Cooke
announcing establishment of an investigative survey and a DOD Task Group on Subsistence Procurement to ases DO D's
procurement system for fo----------------48
C. Executive summary and list of recommendations from the report
of the Department of Defense Task Group on Subsistence
D. Executive summary and recommendations of the General Officer
Ad Hoc Committee on Subsistence, Department of the Armyv-- 61
E. Letter from the Administrator for Federal Procurement Policy-:
Lester A. Fettig to Senator Chiles informing the Senator of steps taken to reform the Governments procure ement of food,
July 29, 197----------------------69
F. Recommended executive branch plan for a Governmrent-wide
food quality assurance program for food procured by Federal
G. Recommended executive branch plan for effective use of market
information in the Federal food procurement system------------78
H. Memorandum from Administrator of OFPP to the Secretaries of
Agriculture, Commerce, Defense, Health, Education, and Welfare, Interior, Transportation, Attorney General, and Administrators of General Services and Veterans Affairs announcing approval of a Government-wide quality assurance program and requesting that the Secretary of Agriculture assume responsibility for managing the program, July 29, 1977___________--84
1. Memorandum from Administrator of OFPP to the Secretaries of Agi iculture, Commerce, Defense, and the Administrator of Veter ans Affairs announcing approval of a Government-wide market information for food procurement program and requesting that the Secretary of Agi icultui e assume responsibility for
managing the program, July 29, 197------------85
J. Letter from Carol T. Foreman, Acting Secretary of Agriculture, to Lester A. Fettig, Administrator of OFPP, accepting for USDA responsibility to manage a Government-wide quality assurance
program, September 23, 17----------------86
K. Letter from Howar d W. Hjort, Director of Economic Policy
Analysis and Budget, USDA to Lester A. Fettig, Administrator of OFPP accepting for USDA responsibility to manage a Government-wide market information system, October 18, 1977 ---- 87 L. Letter from Senator Lawton Chiles to Secretary of Agriculture
Bob Bergland indicating his concerns over disciplinary action taken against John Coplin, Chicago main station supervisor for
USDA meat grading branch, April 25, 17----------88 M. Letter from Seci etary Bergland to Senator Chiles acknowledging
Senators letter of April 25, 1977, relating to disciplinary action
taken against John Coplin, May 20, 1977------------93
N. Letter from Carol T. Foreman to Senator Chiles announcing rescission of personnel action taken against John Coplin, June 24,
On July 1, 1975, samples of beef were taken without prior notice from two trucks arriving at Norfolk Naval Base from G&G Packing Company of Boston, Massiachusetts, Staff of the U.S. Senate Subcommittee on Federal Spending Practices and Open Government took the samples from Norfolk to Andrews Air Force Base outside of Washington, D.C., and arranged to have qualified military personnel inspect the beef samples for compliance with contractual sl)ecifications. Results of the inspection exposed grossly inferior meat than paid for and led the subcommittee to arrange for additional testing.
By the end of 1975, the subcommittee had initiated a wide scale investigation and determined that critical deficiencies existed with the Department's procurement system for beef. Chapter I recounts major events in 1975 that contributed later to subcommittee deliberations and recommendations for reform.
The decision to "spot check" the Norfolk shipments was based on
--taff discussions in early May of 1975 with Frank Bauer, President of Max Bauer Meat Packer, Inc., Of Miami, Florida. Mr. Bauer produced and sold beef products to both the Department of Defense (DoD) and the Department of Agriculture (USDA). He criticized procurement practices employed by the DoD and maintained that USDA's pro-cedures were more efficient.
Mr. Bauer specifically alleged that uniform inspection procedures were not being applied to meat packers by the military and that product specifications were unreasonably rigid. While he had repeatedly tried to make his views known through the military chain of command, a recent experience caused him to turn to his elected Representatives in the Congress.
Diced beef that Bauer produced with equipment approved by DoD's own research laboratories at Natick, Massachusetts, failed to pass inspection performed by militar-N, personnel in his plant. Military specificatiOlls required that pieces of beef weighing less than one-half ounce not exceed a certain proportion of a sample bag.
While Bauer admitted that his product did not conform to this rigid DoD specification, he had learned that diced beef produced under similar conditions and equipment elsewhere in the country did pass. Having once subcontracted a diced beef contract to a firm in Chicago, Bauer was convinced that something was wrong since that product passed inspection and found its way into the military supply system.
An initial expression of concern made by Mr. Bauer through a congressional office other than the subcommittee brought the following
response from the Defense Supply Agency, the procurement agent for DoD:
Your consitutuent's concern regarding lack of uniformity
in inspection practices is understandable because his product was rejected; however, there is no reason to suspect that inspection policies or procedures varied widely for the specific defect that resulted in the rejections for the Bauer's contracts.
These are very clear-cut, with minimal judgment or experience required for their accomplishment. A sample unit (bag) is sorted out and individual meat pieces weighing less than
/2 OZ. (measured to the nearest Y8 oz.) are identified. Their percentage of the total is then determined. To insure that inspection procedures are consistent throughout the industry, a DPSC handbook is provided for guidance to inspectors, and periodic visits are made to various plants by inspection evaluation officers at the DPSC Subsistence Quality Assurance Branch.
The Catch-22 nature of the response motivated Mr. Bauer to pursue the matter further. He additionally alleged to subcommittee staff that market analyses he had performed indicated that for several meat products purchased by DoD for troop issue, raw material costs exceeded the price being paid for the products. I He pointed out that most of diced beef products being purchased were from New England area plants and suggested that if there was a breakdown in the system, it was most likely to be found in that area.
Given the subcommittee's jurisdiction in government procurement practices, Mr. Bauer's concerns were of interest. Two basic questions were presented by the issues he raised: was the DoD procurement system for troop issue beef working equitably and efficiently; and what savings could accrue from comparing the beef procurement programs of USDA with that of DOW
Inquiries with individuals knowledgeable about the meat industry tended to substantiate the allegation that prices were out of line. The subcommittee decided to seek an independent test, of diced beef after inspection and purchase by the military. The most convenient shipments to intercept and test from the New England area were contracts from a G&G Packing Company of Boston for diced and ground beef arriving at Norfolk, Virginia, on July 1, 1975.
On July 3, 1975, thawed samples of ground beef and diced beef were inspected by Army and Air Force veterinary personnel at Andrews Air Force Base. Subcommittee staff were present to observe.
Foreign material, including a fly, flecks of metal, hide and hair were found in the diced beef. A flagrantly excessive percentage of "fines, 1) pieces of beef that weig ed. less than one-half ounce, were found in each sample bag. In principle, the beef should have been subjected previously to two separate inspections. Results of this (ispot inspection" left the strong impression that the beef examined had not been inspected at all during processing and packaging
Raw material costs may be calculated from Industry price sheets.
THE JACKSONVILLE SHIPMENT
Shortly after the Norfolk test, the subcommittee requested an additional examination on another New England company, Blue Ribbon Frozen Foods, of Hamden, Connecticut. The inspection took place in Jacksonville, Florida, on July 11. Ag, ln, military inspectors conducted the inspection. All three beef items inspected-oven roasts, grill steaks and ground beef-were found to be in nonconformance. A re-test of two of the items on July 17 also found the oven roasts deficient.,
The results showed the grill steaks to be consistently underweight by 2 ounces below the required minimum. The oven roasts were found to possess excessive surface fat and during the second test, indications of aged and off-conditioned meat were noted. For the second time, it was evident that the military had not received the product it had paid for.
INITIAL STEPS TAKEN BY THEDEFENSE SUPPLY AGENCY
Findings of the first two tests suggested potential fraud on the part of some vendors and serious- negligence, if not malfeasance, on the part of military personnel. Shortly after the Jacksonville inspection, the Defense Supply Agency (DSA) made the subcommittee
aware of corrective actions it was undertaking.
One action was:
A formal audit team composed of members from the U.S.
Army Health Services Command, the U.S. Army Natick Development Center, and Headquarters Defense Personnel Support Center (DPSQ is being formed and will, during the next 30-day period, perform a formal audit of fabricated meats in the inventory that have been produced in the Boston
At Senator Chiles' request, the audit was expanded to include the products of as many other vendors as possible. Six locations of military cold storage warehouses were selected by the Defense Supply Agency. They included Landover, Maryland; Cheatam, Virginia; Chicago, Illinois; Denver, Colorado; Alameda, California; and Kansas City, Missouri. A staff representative of the subcommittee traveled with the audit team at all locations and monitored the inspections performed. A representative of the Department of Agriculture, Meatgrading Division, served as a technical liaison to the subcommittee representative. A representative of the Department of Agriculture's Meat Inspection Division was present at all inspections in order to determine whether findings of the audit team presented a health hazard. The General Accounting Office (GAO) was asked by Senator Chiles to monitor the security and testing procedures the audit team employed.
DSA further advised the subcommittee that, under direction of its Command Security Office, it had initiated inquiries with field investigative activities of DoD to determine if collusion between military inspectors and meat vendors existed and if fraud against the
2 Effective Jan. 1, 1977, Defense Supply Agency changed its name to the Defense Logistics Agency.
government on the part of any contractor in the Boston area had taken place recently. This step represented the beginning of criminal investi 'gative activities in the New England area by the Defense Department.
THE GENERAL AccoUNTINGOFFICE
By letter of July 14, 1975, to the Comptroller General of the General Accounting Office, Senator Chiles requested GAO's involvement in examining the manner in which the Department of Defense procured beef for the Nation's troops. The GAO was specifically requested to:
Monitor the security arrangements and sampling techniques
employed by the DoD audit team;
assemble military meat contracting statistics from fiscal years
audit selected contractor,-- to ascertain whether DoD was
receiving the qualify of beef for which 'it had contracted;
review DoD specifications for beef items to determine their
impact on costs and competition; and
review D oD meat inspection procedures.
General Accounting Office auditors were present at the second Jacksonville inspection and at all locations visited by the audit team. At the completion of the audit team's travels in August 1975, members of the team briefed GAO personnel as to their findings and impressions. After consultation with the subcommittee, GAO proceeded to conduct independent studies of its own. The GAO later testified at subcommittee hearings on May 13, 1976. A formal report entitled "Procurement Of Beef By The Department of Defense-Are We Getting Our Money's Worthf, was published that same month.'
DEFENSE SUPPLY AGENCY AIJDIT TEAM RESULTS
From the subcommittee's standpoint, the purpose of the nationwide audit was to determine the meaning of the Norfolk and Jacksonville "spot checks." Did the findings at these two locations indicate isolated instances of wrongdoing or negligence, or did they reflect a major breakdown in DoD's procurement system for troop issue beef?
According to DSA's calculations, samples which statistically represented 1,221,600 pounds of beef valued at $2.4 million were inspected. Of this total, 61.5 percent, or 750,939 pounds, were found not to be in conformance with military specifications. Critical nonconforming product amounted to 3.5 percent of the total. Major nonconforming product amounted to 23.2 percent of the total.
Significantly, of the 19 vendors across the country whose beef products were examined, 16 were found by the audit team to have sold the military nonconforming product.
The (degree of nonconformance, and the reasons for nonconforming beef varied widely. The products of G & G Packing Company and Blue Ribbon Frozen Foods indicated the most serious violations, incluidingu substitution of lower priced cuts and grades of beef than specified. While not as evident, the pr-oduicts of other companies raised frequent suspicions of sub-stituttion of grzide. At the other end of the
:1 PS Ai-76-142, -May 25, 1976.
scale, one ground beef contract was deemed nonconforming because a single, small piece of paper was found during the examination.
Despite the variance, the fact remained that well over a majority of the products inspected failed to meet contractual requj11irenients. Factors involved in this finding were:
Deliberate efforts not to conform in order to increase profit
(including possible bribery and fraud);
sloppy workmanship-either deliberate to cut production
costs or through negligently managed quality control inspection systems by both the vendor and the Veterinary Corps; and
rigid and unrealistic government specifications.
The audit team's findings coupled with information gained from staff interviews and field visits demonstrated by early- September 1975, that serious, and pervasive problems existed in DoD's procurement system for beef. The "spot check" finding in Norfolk and Jacksonville did not indicate isolated instances but rather reflected a systemic problem in the procurement system for troop issue beef.
The subcommittee was aware that there were problems with the specification process for DoD purchases, the contracting procedures used by the 'Defense Personnel Support Center,- and the inspection process performed by the Army and Air Force Veterinary Corps. An issue of great concern was the extent to which the procurement system encouraged and allowed illegal and criminal behavior on the
p art of the small number of vendors who supplied the military. Quite clearly, the government was not getting its money's worth.
JUSTICE AND DEFENSE INVESTIGATIVE SERVICES
By letter of July 31, 1975, Senator Chiles advised the Attorney General of initial findings and of allegations of fraud against G&G Packing Company.
On August 8, 1975, a subcommittee staff member met with a representative of the Criminal Division, Fraud Section, of the Justice Department. Material obtained by the subcommittee was delivered for the Department's use. Included was an anonymous letter received by Senator Chiles. The sender claimed to be a former employee of G& G Packing Company who had been fired for refusing to cooperate in illegal schemes against the military. Abusive practices were detailed and photographs which supported the allegations were enclosed.
In early September, findings of the limited criminal investigation under the direction of DSA's Command Security Office were brought to the subcommittee's attention. Allegations of fraud and collusion had been made in the past against many of the same individuals and associates involved in the present set of allegations. Repeated probes by the investigative units of the Department of Defense and the Justice Department had brought few results. The historical pattern evident suggested that the companies and individuals involved believed they could act with impunity. The example set for the entire industry that supplied the military with meat was a frightening prospect.
By letter of September 17, 1975, Senators Chiles and Weicker brought the military's beef procurement problem to the Secretary of Defense's attention.4 They requested that an investigative task force
4 See Appendix A.
be constituted to fully examine the problems surfaced by the audit team, the subcommittee, and preliminary investigative inquiries.
A letter of September 26 from the Secretary's office announced two
-actions to be taken as a result of the request. First, the Defense Investigative Service (DIS) was authorized to establish an investigative task force with resources drawn from all the investigative agencies of the military departments. Initially, the investigation was to concentrate on allegations against Blue Ribbon Frozen Foods and G&G Packing Company. Should this start reveal systemic flaws in the procurement process, the DIS was authorized to expand the inquiry to pursue all potential leads of noncompliance or criminality and to develop a full understanding of the problems.
Second, a DoD task group was established to studj DoD's subsistence procurement system and determine what changes to the system were needed.
Both the criminal investigation and the study ~oii p. werTe to keep the subcommittee apprised of their progress. The stt dy group issued its: report and recommendations in August of 19,76.,! The ciminal iuvestigti6n, due to the nature of its work, and an agreement between the Department of Defense and Justice, soon fell unJer the #fi revision of the Justice Department (DoJ). DIS was to evtally establish field offices in Boston, Philadelphia, Chicago, New C(rl-'eans, Dallas and Los Angeles/San Francisco. The investigation continues.
By the end of 1975 the subcommittee had concluded that DoD' procurement system for beef had collapsed. The result' of the nationwide audit were ominous and wide ranging. The question that remained was how severe the consequences were. The subcommittee had initiated a GOA study, an internal DoD study, and a special joint criminal investigation by DoD and the Justice Department. A framework for the subcommittee's examination and evaluation of DoD's procurement practices was in place.
In August, G&G Packing Company and Blue Ribbon Frozen Foods refused a GAO request to audit their records. The subcommittee issued subpoenas for records and principals of the companies. Harry Goldberg, president of G&G Packing Company and Blue Ribbon Frozen Foods and Fred Romano, General Manager of G&G Packing Company appeared before the subcommittee in October. The records were not forthcoming and both witnesses invoked their fifth amendment rights not to incriminate themselves.
The full Committee on Government Operations authorized the subcommittee to proceed with court filings necessary to empower the committee to grant congressional immunity to three witnesses should it choose to do so. The name of Frank Goldberg, vice president of G&G Packing Company was added to those of the two previously subpoenaed witnesses.
Once empowered, the subcommittee postponed its decisions to confer immunity until its own investigators developed more information regarding the New England situation. The subcommittee decided to pursue its own field investigations.
SSee Appendix C.
THE DEFENSE DEPARTMENT'S PROCUREMENT SYSTEM FOR BEEF
The subcommittee employed a conceptual framework in examining the Defense Department's procurement system for troop issue beef. Four major sets of actors, each with its particular roles and responsibilities, combine to perform the overall procurement function.
The "planners and specification writers" are responsible for DoD's food service policy and determine what the DoD requirements for beef are.. The "'government buyers," the contractors, do the actual purchasing of the beef. 'Inspectors" insure that beef meets the military's specifications for its needs. ",Vendors" within the private sector supply the government. The subcommittee examined the roles of each of these sets of actors and their relationship to one another in addressing the problemss of the DoD pr locuremeIt. system for beef.
This perspective was used in the subcommittee's independent fietd investigations, in organizing public hearings, and in assessing the results of studies initiated at:the subcommittee's request or in response to its investigative findings. These include two nationwide fabricated beef audits managed by the Defense Department and studies perfored :by i:A1Joint -DoD Task Group on Subsistence Procurement, an 'Armly Gef-eral Officer Ad Hoc Committee on Subsistence; the General Actiounting Office, and a governmentwide Interagency Food Quality A's'i'ance Planning Committee tasked by the Office of Federal Procurement Policy. Results and investigative' findings made available to the subcommittee by the nationwide criminal investigation conducted by DIS and the Justice Department were also related to this perspective.
While the focus of the investigation was upon DoD's procurement of fabricated 'beef items,6 the subcommittee viewed beef as a case example illustrative in many ways of DoD's procurement system for all food. Problems addressed by the subcommittee in each of the four sectors may exist for the Department's procurement of other food items as well.
PLANNERS AND SPECIFICATION WRITERS
Office of the Secretary of Defense
The Assistant Secretary of Defense for Manpower, Reserve Affairs and Logistics, OASD (MRA&L) within the Office of the Secretary of Defense has ultimate responsibility for overall policy guidance and direction for the DoD Food Service Program. The purpose of the program is to provide logistic support and menu planning for military personnel.
The Directorate for Supply Management Policy within the Office of the Deputy Assistant Secretary of Defense for Supply, Maintenance and Services has specific responsibility for food service policy. A DoD Food Planning Board assists the Directorate by providing guidance and direction to the program. A staff assistant to the Deputy Assistant Secretary serves as Chairman of the Board.
6 Fabricated beef for troop issue includes the following items: grill steaks, swiss steaks, oven roasts, pot roasts, diced beef. ground beef bulk, and ground beef patties.
The DoD Food Planning Board
The Food Planning Board is responsible for providing uniform menus and recipes and determining food items that are to be used by the individual services in their food programs. The Board also initiates and processes requests for new foods, packaging, and other changes to existing specifications. The Board is composed of a food service officer from each service, a subsistence expert from the DLA, and other technical experts from the services deemed necessary. The membership is primarily drawn from personnel highly trained in food specialities.
The Board is responsible for and relies upon three subordinate committees to support its operations. The three committees are the Armed Forces Recipe Service Committee, the Armed Forces Menu Service Committee, and the Armed Forces Product Evaluation Committee, (AFPEC). The committees are composed of board members and food specialists drawn from the services. The Recipe Committee
The Recipe Committee is responsible for the compostion and publication of recipes to be used by military installations. The Menu Committee
The Menu Committee is responsible for the development and maintenance of a cyclic menu which can be* used by all the services in their feeding programs. The committee puts together a master menu which serves as a standard for nutritional values to be used by military mess halls.
The Product Evaluation Committee
The Product Evaluation Committee serves as a coordinating point for the military services for determining the essential characteristics and acceptability of food items they use. The committee plays a significant role in the resolution of specification problems and in the evaluation of new products brought to its attention by industry or Natick Development Center.
Natick Development Center (U.S. Army)
Natick Development Center is primarily an Army Laboratory with inter-service representation and membership. Natick operates the research, development, testing and~ engineering (RDT&E) program for the services in subsistence items. Tphe Center is responsible for the technical adequacy of specifications, st and ards, and purchase descriptions for food and serves as a technical arm to AFPEC.
A second set of actors in the procurement systein are the g-overnnient buyers, the contractors. Thlis set of actors comprise the business managers of the procurement system. T1he Defense Logistics Agency serves as a central purchaser and supplier for all the services. The Defense Personnel Support Center, located in Philadelphia, is a coinponent of DLA responsible for buying subsistence items for troop issue.
Defense Personnel Support Center
The Subsistence Directorate within DPSC is responsible for the procurement, warehousing, inventory control, and issuance of about 1,700 perishable and nonperishable commodities for troop consumption and for resale by military commissaries. In fiscal year 1975, DPSC purchased $120 million of troop issue beef which amounted to 29 percent of all perishable items purchased.
Warranty actions are enforced by the DPSC General Counsel's office in conjunction with legal counsel in the 22 subsistence points. Price adjustments on products that do not meet contractual specifications may be obtained.
The DPSC operation is financed through the Defense Stock Fund, a revolving procurement account. The Center "sells" meat it procures to the Inilitaxy service customers at prices equivalent to averaged costs. The funds collected from sales are used to replenish the Stock Funde
The third set of actors are the military inspectors. Veterinary Service personnel of the Army Health Services Commandjerform. a major portion of the quality assurance function for DPkS procure ment. With assistance from the Air Force Veterinary Corps they have the role of making sure the government gets what it pays for as well as inspections related to fo(:rd sanitation"'and wholesomeness. Within continental United States, DoD relies heavily upon the Department of Agriculture for sanitation inspections of suppliers to the military.
Commissioned Officers of both Veterinary Corps are all Doctors of Veterinary Medicine. They are generally in a position of administration and supervision of non-commissioned officers who perform "hands-on" inspections.
"At origin in-plant" (class III) and "at destination" (class IV), inspections are performed by veterinary personnel. Class IV inspections are checks for condition, count and temperature when supplies are received at military warehouses. For the class III in-plant inspections an inspector should check all incoming carcasses and/or boxed beef to assure that the product will meet specifications for condition, grade, and weight. In-process fabrication of the beef, lotting procedures, and labeling of beef boxes should also be supervised. Class III inspections require that a statistical sampling procedure be used to test processed and packaged "end-item" products for specification conformity:
uring in-process examination of beef processing, an inspector stands near the boning line watching that proper procedures and trimming are applied. At any time, he can consult with the vendor's plant quality control representative, should he determine that there is cause to question any activity on the boning line or in the plant's other operations that might affect the quality of the beef product.
The nature and extent of "at origin" supervision of plant operations is highly variable. Much depends on the expertise, motivation, and resources of the team of inspectors and their supervisor who have responsibility for class III inspections.
Should an inspector determine that product does not conform to specifications, he has the power to provisionally or outrightly reject the product.
Significantly, at origin inspections are not designed to be 100 percent supervision of a vendor's processing of beef. Rather, they are designed as a spot checking process whereby the government verifies the quality control program of the vendor. The vendor is required by the government to have an acceptable quality control program which includes an end-item statistical sampling procedure to be performed for all military contracts. Both the in-process supervision and end-item testing by military personnel are designed as checks on the vendor'sown quality control program.
The fourth set of actors are the vendors,. those wh6 p'roduce and supply beef for militai'y pilrchase. The Departmnt:f Agriculture calculates that there are about 2,500 processors of beef products in the United States. In fiscid 1975 the DoD did business with 55 of these firms, of which 13 supplied 84 percent of the tro.op-issue beef.
The limited number of vendors who participate ii. the militaryy beef maraiket are generally small businessmen who prod~k primarily for the military. Some also supply the United StatesIDepatment of Agriculture but.most restrict thei' operation.
Vendors are primarily responsible for assuring the quality their products. Pre-award surveys conducted under the ausIspics of the' Defense Logistics Agency are designed to insure 'that a %veidor's quality control ,system meets the government's reqtirements.
DoD PROCUREMENT SYSTEM
Certain points which relate the four sets of actors should be made.
Each set of actors has their own particular institutional orientation. Each sector has its own personnel types with different professional training and career expectations. Accordingly, organizational units within the four sectors differ in their attitude, emphasis, and priority they place on meeting the missions assigned to them to perform the overall DoD procurement function.
For example, the primary mission of the Health Services Command is the health of military personnel. Insuring that food products meet product characteristics designed to meet serviceability requirements rather than health requirements demands different kinds of personnel skills and training than a health mission stresses.
Ultimate responsibility for the quality assurance function performed by the Veterinary Corps resides with DPSC. Since mid-1976 inspectors have had the authority to reject products but the decision to price adjust on nonconforming products and the power to overturn an inspectors determination still reside with DPSC. Quality assurance for products is a corrolary mission of DPSC. Its primary mission is to supply the Armed Services. The attitude of the buyers in the system is to place their emphasis and priority in insuring that the services are supplied. If a conflict is perceived between accepting a nonconforming product and a supply failure, the primary mission prevails.
Responsibility for the whole system is with the office of the Secrietary of Defense. Heavy reliance for guidance is placed upon the DoD food planning board and its constituent committees and technical arms. Thle orientation among this set of actors is to place emphasis upon defining and coordinating the particular needs of the services. Food specialists dominate. While the quality of food is given great attention, cost considerations are not.
The subcommittee brought this awareness of thm institutional context of the DoD procurement system to its investigation. Throughout its deliberations considerable attention was given to determining the organizational location of accountability among the four sets of actors for particular procurement decisions. Tracingthe decisions surrounding an individual procurement transaction revealed confused chains of co mmiand. within organizational hierarchies and dispersed accountability between the four sets of-actors. Problems were found among all four sets Qf aors. The buck (lid not stop anywhere. Who was accountable was not understood.
Chairman Chiles expressed his view in his opening statement of May 10, 1976, that a.majorproble m that the subcommittee had found was "not only because some meat companies were engaging in fraud, not only because some military inspectors were.on the take-but also because the whole system is like a Rube Goldberg invention. It .goes through an- awful lot of very complicated motions to get *very little accomplished." The subcommittee was conscious that this finding related to -the whole DoD procurement system, not just'the. Boston area.
This chapter, a case study, tells what subcommittee investigators found in Boston-demoralization, lack of supervision, inadequate training, financial hardships for military inspectors forced to live offbase on the Boston economy and flagrant criminal activity. Highlighted by direct quotes from witnesses either to subcommittee investigators, or repeated during the course of public hearings, the Boston story is a comment upon the status of the entire DoD procurement system during late 1974 and 1975. The most significant aspect of the story is that individuals who were in positions of responsibility and leadership did not prevent the collapse. Those who tried were rebuffed, often by superiors outside of Boston in higher levels of the chain of command. After trying, they often joined the squalor.
FIELD INVESTIGATIONS BEGIN
In January, 1976, two staff investigators traveled to San Antonio, Texas, headquarters for the Academy of Health Sciences, to attend a special 2-week red meat inspection workshop. The workshop was one of a series of courses put together for the first time in an attempt to standardize the meat inspection function, recordkeeping and decisionmaking, and to alert top enlisted and officer personnel in the Veterinary Corps of the adverse findings of the audit team.
While the workshop was intended to be a "refresher" course, the investigators learned that many of the individuals who had served
in the Vet Corps as food inspectors had never taken previously any additional training in their career field beyond the basic 8-week inspection course.
Staff investigators arrived in Boston in February 1976 and found the unit totally demoralized. The cost of living in Boston is high and is not adequately compensated for by quarters' allowances. For every dollar the average citizen spends in a standard cost of living area around the United States, Bostonians must spend $1.18 to buy the same item or service.7
Boston, military inspectors said, had been notorious for years as a place where meat packers will "try every trick in the books." A manpower shortage existed and continued requests to Health Services Command for additional personnel had gone unanswered. Inspectors felt demoralized by the long and challenging hours demanded by the workload.
COMPROMISING THE INSPETORa
The Boston unit had been drawn tothe by a collective feeling of misfortune. After hours mig of offIcers and enlisted personnel, male and female, at the Powerhouse Pub in South Boston, was not infrequent. Wednesday night organoleptic (food tasting) parties were held at the "Wac Shack," where three female inspectors resided, or in the unit office. The office was well supplied with pots and pans so that individuals could take turns preparing hamburgers, spaghetti, stew and chili. Meat served was stolen from the plants. The ground beef was the excess meat from the fat tests for hamburger meat.
Military specifications require that Hobart (a machine which examines for fat) tests be performed on a random sampling of each day's ground beef production from each plant. Anywhere from 50 to 100 pounds of hamburger meat collected in the unit freezer every week. The vendor was allowed to do whatever he wanted with the excess meat, but no vendor ever requested that it be returned to the plant. For sanitary reasons, the USDA would not approve such a practice. With no directions as to the disposal of this meat, inspectors took it from the freezer at will. Vendors knew the soldiers were eating the meat and believed the practice was wholesome, cut back on pilfering, and kept the inspectors happy.
The parties at the "Wac Shack" generally involved the single members of the unit. The meat served was stolen. Most stealing was from G&G because it was easier there. The vendors were known to be friendly to inspectors. Tenderloin from G&G "ate very good." I So di( the roast. At least once, the supervisory meat inspector working at G&G stole some diced beef to prepare a good stew.
How To STEAL
One female inspector, Ms. Nadia Ilover-Booth, told how she was taught to steal a roast the first day on the job by a senior inspector.
7 Department of Labor, Bureau of Labor Statistics, Hypothetical Marketbasket Survey, fall. 1975.
8 Kevin Fagan, subcommittee staff interview.
wh. xren you are doii v)11 llinsIpectio)n, Vo11 have a whiol
bunch of boxes next to vou and when.yot do1 tie fat test, yomi have to take out a. sallple from each box and plt it in a ba and put that in a bigger bag. So you are doing the ground bee and when you are about half way through that, vou look at an oven roast and you just take out the roast and stiff it in a bag with the ground 1)eef and cover it up with the ground
She stole so that she could feed her roommates and fellow inspectors-oftentimes at their request.
The G&G managers later began -apping up the meat for M,;. hIover-Booth. On three occasions they filled up her mother's (dZlr trunk with roasts and hamburger meat when ie came to visit her
daughter. This meat wa-s never requested, but neverthel(ss waaccepted graciously. Low payv, coupled with the above average c ,st of living in the Boston area, increased these temptations for meat inspectors.
NoT DOING THE JOB
Prior to the audit team findings in July 1975 and before any corrective action had been initiated in the Boston unit, it was not tincommon to walk into the unit and find officers and enlisted personnel alike playing poker for anywhere from a penny to 50 cents a hand. Individuals who played in these games did not particularly feel that they were delinquent in their duty, always assuring that someone else covered the plant to which he was assigned. Consistently one could find the NCOIC (Non-Commissioned Officer in Charge) in the game. His duties were to see that all plants were sufficiently staffed, that the paperwork was being completed correctly, and that the "meat team" inspectors were properly supervised and trained. Leadership and the enforcement of discipline were the keystones of his position.
Plants were, however, not sufficiently staffed-some only had one very junior and inexperienced inspector handling a full day's workload. Paperwork was not being handled accurately. Sampling plans were not being kept on file or turned in. An attempt by the OIC (Officer In Charge) to stop or cut back the poker playing was rebuffed. Discipline was practically nonexistent.
ON THE JOB TRAINING
On the Job Training (OJT) was a farce. The second senior enlisted man, a sergeant first class, had the primary responsibility of roving from meat plant to meat plant, assuring that all problems were being handled properly. He was to see that young and inexperienced inspectors were trained and supervised and, that his expertise and leadership were available if and when needed. This individual had difficulty getting to work on time-often arriving around 11 a.m. Plants usually begin production around 7 a.m. Frequently he would disappear shortly after coming to work or in the afternoon. He worked a second job in
9 Hearings before the Subcommittee on Federal Spending Practices, Efficiency, and Open Government, May 10, 12, 13, and Sept. 21 and 23, 1976. 94th Cong., 2d sess.. p. 9.
the evenings as a security guard for a department store. Repeated counseling sessions by the GIC failed to improve his work habits.
WHAT To Do WITH NEW RECRUITS
When the three female inspector's arrived in Boston they learned that no preparation had been made for them with respect to living accommodations. After living in a male specialist's one-room studio apartment for 1 month because they didn't have enough money among them to rent a place, their sergeant finally took them out to Arlington, a suburb approximately 18 miles North of Boston, where they found a house to rent.
No MONEY FOR RENT
Investigators were advised that young veterinary inspectors being sent to their first assignment after completing the 8-w'veek basic food inspection training course have about $300 in their pockets, saved (luring the time they are attending school. The young recruits are then sent on a 2-week vacation prior to reporting for their first duty assignment. Many yougisetr arrived at their new job wNith very little cash remaining after the vacation. Accordingly, supplements to their income, such as stolen meat, were duly appreciated.
Nadja Hoyer-Booth borrowed $400 from the G&G managers so that she could buy a car to help ease the commuting difficulties. Sometimes the WAC's could hitch a ride with one of the sergeants who lived nearby. But since all worked different hours and different assignments, it was more likely that each had to first take the bus, to the subway station, ride the subway for a distance, and then walk or take another bus on to the unit office located some quarter mile from the subway station-arriving between 6:30 and 6:45 a.m. This meant that some had to get up as early as 4:30 a.m. Upon arrivingr at the office, they were transferred to their plants by one of the three trucks supplied the unit. One inspector, who elected to commute directly to the plant, estimated that his commuting costs peir month were around $40 out of his own pocket.
JOIN THE ARMY, SEE THE WORLD, PAY YOUR OWN WAY
For individuals with a family, the housing question was even more frustrating. Competition for leased housing is extremely keen. One inspector applying for government housing learned it would be about 22 months before he could be accommodated because of the very long waiting list in the Boston area. ROTC instructors are eligible for leased housing under the Fort Devens Director of Industrial Operations' Office. Food1 inspectors are not. This lparticullar inspector, a serge ant first class with 18/,2 years' experience in the Veterinary Corps, was promised leased housing and/or monetary assistance when he was transferred to Boston in August 1975. Selected for his experienIce, temi peramient and skill, lie was charged with putting Boston back ifl shape as the new NCOJC. lHe was advised. that special arrangeinents wNould be made for him to be eligible for leased housing.
His housing in Boston cost him $385 per month, including all utilities. This does not compare favorably to his previous rent on base of $178. His car insurance escalated from $206 to $385 per yearthanks to living in the Boston area. His commuting costs, including gas, maintenance and the travel expenses for his four children to go to and from school, cost him $32 per week, compared to $8 per week at his former post. T he commissary, located 18 miles away from where he lived in Boston, was utilized for only 60 percent of the grocery sh1opping compared to 100 percent at 2 miles travel-time in the past job. For rent alone, he found that he was having to dig into his savings to the tune of $100 per month in order to "afford" the Boston assignment.
In August 1976, a year after he arrived, accommodations were finally arranged for the sergeant and his family to live at Fort Devens. This entailed a transfer of duty assignment.
As mentioned previously, the sergeant first class charged with roving the meat -plants and on-the-job training of inspectors (lid not (10 his job. This behavior was not corrected by the N COIC, the officers, or the Veterinary Colonel at the Fort Devens MEDDAC (Miedical Department Activity), charged with overviewing the four units under his command. Neither (lid any of these individuals assume the re-sponsibilities.
The two officers assigned to Boston prior to the fall of 1975 often could be found playing poker. They also requested meat to be stolen for them by lower level inspectors.
The three captains who replaced the two outgoing Doctors of Veterinary Medicine (DVMs) were fresh out of veterinary school, having completed the same basic 8-week food inspection course a~s the young private E-2 enlisted men. The captains expressed shock and dissatisfaction to find themselves placed in a food inspection mission. They felt their assignments were a mismatch to their training. Frustrated, they became somewhat detached from the inner workings of the unit. Instead, they spent much of their time writing letters to their Congressmen, various veterinary journals and others protesting the use of DVMs in the food inspection role.
NOT A FOOD INSPECTOR
The following exchange in the hearings between Senator Wveicker and Captain James Flom, former OIC of the Boston unit, is telling:
Senator WEICKER: You and your fellow captains in the Boston unit., how (lid you view this dluty?
Captain FLoN1: Again, I think I can only express my own
opinions here. They are probably shared by other captains-.
I felt . I feel that I am a veterinarian. I (10 not feel that I a~m a food inspector, and I made myv views very clear very
early on this point.
I think that it is fairly easy to see, when you compare the
curricula of a veterinarian school with the duties expected after graduation, you are not prepared for the duties you nre
expected to perform out of veterinary school.
CAPTAINS AND PRIVATES TRAINED THE SAME
And, later in conversation with Senator Chiles: Senator CHILES: We had testimony yesterday-in our last
hearing, and we were talking about people who had 1Y2 days' training on red meat who told us they would learn their jobs
from the people they were supposed to be inspecting.
Captain FLO A-: Yes, Sir, that is correct, and that is not an
uncommon finding in the field, that the vendor does train some of the military inspectors in whatever area they are
Senator CHILES: That is not offering much in the way of
leadership to these people who are just coming into service
or enlisted personnel, is it captain?
Captain FLOM: No, Sir, it is not. But in order to train, you
have to understand that area yourself: I, myself did not feel when I entered the service that I had the ability to train anyone. I came out of the same school that the privates came out
of, so essentially we were on the same level.10
The veterinary colonel at the Fort Devens MEDDAC visited the Boston unit monthly or less. He, too, had been frustrated by the system. When he learned that three newly graduated captains had been assigned to the tough demanding meat area served by the Boston unit, he attempted through the Health Services Command to trade one or two of them for a major with experience in food inspection. His efforts were rebuffed. The colonel himself visited the branch infrequently, once a month or less, and offered no real leadership in solving problems in the unit.
A veterinary food inspection team making annual supervisory visits out of the Health Services Command headquarters in Texas repeatedly reported that the Boston branch lacked sufficient number of personnel, as well as individuals with training and experience.
A similar plea came from the NCOIC, Sergeant Reidinger, shortly after his assignment to Boston. In a "to whom it may concern" letter dated May 15, 1974, which Reidinger hand delivered to Veterinary Lieutenant Colonel George Orthy at Fort Devens, he stated:
This unit is fast approaching the point of complete mission
failure . .
failu The workload and working conditions are fast
approaching the point of no return. It is just a matter of doing the best you can or getting by-there are so many areas of concern that token patching is all that is being done. The
system needs a complete overhaul.
Reidinger testified later that this letter was written prior to his oiionetary arrangement with the G&G management.
I" tHearings, pp. 78-81.
In summary, the Boston veterinary unit was ripe for- Za breakdown. The officers, ill-trained and ill-suited for food inlsj)ctiofl, felt the dluty beneath their dignity. Enlisted personnel were both immature ndi inexperienced. Leadership and motivation were completely abscnt. Supervision was totally inadequate and information that wns pa~ssedl on to the Health Services Command about the insufficiencies of the Boston unit was ignored.
G&G PACKING COMPANY
G&G Packing Company, of Roxbury, Massachusetts, owned and operated by Harry and Frank Goldberg (no relation), opened for business on April 28, 1974. Hired as manager of the plant, Fred Romano had approximately 38 years of experience in the m-eat business. His assistant manager, Frank Ravasini, also had many years of similar experience. Both had previously worked for Central Beef Company, located in Boston, which had fabricated meat for the military for some 30 years.
Blue Ribbon Packing Company, also owned and operated by Harry and Frank Goldberg, was the sister company to G&G. Located in Hamden, Connecticut, Blue Ribbon had recently undergone a rough time with the military inspection system. A team of military meatt experts" had spent a month's time at Blue Ribbon "re-training" the inspectors there -who had complained that they didn't know what they were doing. Following that on-the-job training session, those same inspectors consistently rejected Blue Ribbon products for about 6 weeks-bending over backwards to make sure that the inspection procedures and specifications were followed to the letter. The "get tough" period was short-lived. The inspectors were transferred.
STEAKING OPERATION AT BLUE RIBBON
All shipments of meat carcass and boxed beef were received in Boston at G&G. Cuts used for roasts and steaks were labeled, placed in bins, frozen and sent by truck to the Blue Ribbon plant via TriState Trucking Company, of Chelsea, Massachusetts, which exclusively hauled between the two companies. With the opening of G&G in Boston, the Hamden plant converted to strictly a machine operation. Young, part-time students under the direction of Frank Goldberg and Harry's son-in-law, Fred Testa, tempered, formed and sliced the steaks and tenderized the roasts to meet military contract
speifcaios.G&G To BE A LEGAL OPERATION
Fred Romano indicated that when he was hired by Harry Goldberg in early 1974, it was with the specific mention that G&G was to be a legal operation.
Within 4 months, Romano testified, all that changed.
The initial illegal act at G&G involved the surre'p-titious inclusion of a 30,000 pound diced beef contract, rejected at destination for temperature, into new G&G contracts. It took 3 days to accomplish the switch. The procedure required the replacement of Blue Ribbon box top covers, which list contract number, production dates and destination, with G&G covers and new data.
Reportedly, this only occurred a single time, but it was the first signal to the former Central Beef workers, now working at G&G, that it was to be "business as usual."
The old Central Beef team included Fred Romano, Frank iRavasini, George Ravasini, Edward Kehl, Otis Day, Eddie Booth, and William "Bull" Johnson. Military officials had suspected for years fraudulent activity at, Central Beef, but could not catch them at it.
REIDINGER Is BRIBED
At G&G, Harry Goldberg, through Frank Goldberg's previous acquain)tanceship with the senior enlisted man at the Boston Veterinary Branch, NCOIC Sergeant Charles Reidinger, arranged an exchange. For monetary reimbursement there would be "no hassle." In August or September of 1974, 4 to 5 months after G&G opened, Sergeant Reidingrer interpreted his agreement to mean that easygoing and inexperienced inspectors would be placed in the G&G plant. For this he was initially paid $200 per month by Harry Goldberg. It was delivered in person by Goldberg who usually flew into Boston each Tuesday to look in on the operations at the plant. Frank Goldberg infreqjuently came to Boston, remaining in, Connecticut to oversee the Blue Ribbon operation. In November or December 1974 Rei(linger's payments were increased to $400 per month. He estimates that he received a total of some $3,200-$3,600 from the Goldbergs.
Sergeant Reidinger's relationship with Frank Goldberg had begun about a year prior to the opening of G&G when Reidinger had visited the then senior NOOIO in New Haven, Sergeant Kevin Smith, over a weekend. Inquiring about the possibility of being "fixed up" with a prostitute, Reidinger was referred by Smith to Frank Goldberg. At this time Reidinger was stationed in Bayonne, New Jersey, and did not know that he and Goldberg would later meet up in Boston. On three separate occasions Reidinger requested the favors of prostitutes and received them gratis from Frank Goldberg. During Reidinger's tenure as NCOIC of the Boston veterinary unit he requested call girls paid for by Frank Goldberg on 10 other occasions. In Boston, on three other occasions, Reidinger asked Fred Romano to fix him up. Romano did so.
PACHECO ON THE TAKE
Maiiiiel Pacheco, an ex-Armny sergent, had 20 years' experience in food inspection before retiring and staying on in the Boston branch as a Civil Service food inspector for the military. He was reputed to be quite knowledgeable about food inspection; had once been involved in writing a fish specification; and, was considered to be honest, capable an(I "the best" Boston had to offer.
Testifying before the subcommittee, Pacheco stated that Harry Goldberg had approached him in early summer of 1974, soon after he arrived at G&G, and asked him to accept money in exchange for "not hassling the employee-, and not getting in there and tearing up the place and causing aill kinds of problems." 11 Pacheco added, "He
11 learings, p. 25.
dIidn't say that I would be compelled to do anything shady 01r tif(lerhanded for this."
At first, the ex-sergeant (lid1 not accept money, but when approached repeatedly, he agreed. No figure was established. Pacheco was to receive $50 per' week at first, gradually increasing to $400. He estimates that he received a total of some $8,000 to $11,000 from Harry Goldberg. Pacheco and Reidinger were each unaware of the other's finanicial arrangements.
No OVERTIME FOR CIVIL SERVICE
For a while, Pacheco asserts, the operation of the plant ran smoothly. H-owever, Civil Service only paid him for a 40-hour week. A request from the Boston unit to Hfealth Services command that Pacheco he paid overtime was denied, so sometimes he only p)ut in a 4-day week, or shortened hours, making sure not to exceed the required 40-hour week. He got a little lax with his inspection duties and time spent in the plant. Pacheco felt, however, that the G&G product was wholesome so he was not overly concerned.
No USDA CERTIFICATES FOR GRADE
In fall of 1974, when his weekly remuneration increased to $200 Pacheco was approached by the plant manager, Fred Romano, who told him that loads of meat coming in, while rolled and graded "Choice" or "Good", had no USDA certificates to accompany them. Certificates are required by military regulations and serve as a control. When Pacheco requested a ruling on this from DPSC, Philadelphia, he wvas advised, "Well, as long as it has the grade rolled on iI see nothing wrong. What do you think?" 12 Henceforce, Pacheco accepted meat without USDA certificates.
CARCASS MEAT NOT ROLLED FOR GRADE
Next, carcass meat began to arrive which was not rolled, not graded, and oftentimes aged. Pacheco testified to the subcommittee that while these carcasses contained the USDA seal for' being disease-free and uncontaminated, they were not of the highest quality-some times not even "Good," referring to the USDA meat grading standard. He (lid not feel the expired dates were significant and continued to accept the raw product.
G&G and Blue Ribbon produced in four primary categories; roasts, steaks, diced beef, and ground beef. Military specifications require that all roasts and steaks be produced from raw material labeled USDA "Choice". Diced beef must be prepared from meat graded "Good" or better, and hamburger must be derived from USDA grade "Utility" or better. If any questions were asked, Romano told Pacheco to tell any military officers visiting the plant that the lower grades were being used for hamburger. Edward Kehl, the G&G quality control representative (QCR) recounted that some "Choice" meat was always ordered for use in the plant just in case any brass came around asking questions.
'2211earings, p. 27.
"You GOT THE FEELING THEY OWNED YOU"
With the arrival of large shipments of ungraded boxed beef, Pacheco balked, taking the matter up with Romano and Ravasini. They agreed to cut back. If they did at all, it was imperceptible to Pacheco. Shortly thereafter, Pacheco got into a second altercation with the management over the almost exclusive use of ungraded meat. At this time, Sargeant Reidinger was called in. Again, the management agreed to cut hack on the use of ungraded meat. Again, they failed to do so. Pacheco frustrated, later told the subcommittee, "you got the feeling they owned you." The supervisor could do nothing to correct the situation without exposing his own illegal relationship with G&G.
Edward Kehl testified that about this same time, Frank Ravasini came up with an idea of substituting the knuckle for top sirloin butt on the grill steaks. In sounding out his idea with Kehl, Ravasini figured out a way he could pull off the substitution of the cheaper and tougher cut. There is a covering of fat on the knuckle which is usually trimmed away. The top sirloin butt cut also has a covering of fat which is left on up to Y inch of thickness. By leaving the cover on the knuckle and placing it in the steaking machine in a certain way, Ravasini was convinced he could fool the military. And so, Kehl testified, he made up some samples, showed them to Harry Goldberg and received the go-ahead.
FRAUDULENT ACTIVITY INCREASES
Pacheco's payments increased to $400 per week. He suspected substitution with the arrival of so many knuckle cuts into the plant. More and more, G&G purchased boxed knuckle cuts. Steven Goldberg, Harry's son, charged with the responsibility of ordering all meat, was advised by Ravasini when the knuckle cuts shipped from certain companies could not be used for the substitution because they weren't large enough. Legitimately, according to military specifications, the knuckle can be used for oven roasts and formed Swiss steaks. But at Blue Ribbon they were also fraudulently used for formed grill steaks which are supposed to be cut from the ribeye, top sirloin butt, or loin strip. Kehl estimated that grill steaks from Blue Ribbon were 100 percent knuckle beginning inlae17ancotuigp through July, 1975.13
At this time, grill steaks were selling from just under $3 per pound up to almost $4 per pound in June of 1975. The substitution was saving G&G as much as $2 per pound.
Production at G&G was more than doubling, increasing from 40,000 to 80,000 to 100,000 pounds per day. Had anyone been paying attention at the Defense Personnel Support Center in Philadelphia, the production rate should have been a key indicator that proper' inspections were not being performed.
13' Hearings, p. 55.
Pacheco stated he was taking meat whenever lie wanted-soinetines putting in a special order. lie also took liquor from the plant at will.
Reidinger asked for, and was gjiven an air conditioner for use in his home. It was later returned at Itavasini' s request when the various investigations began. Reidinger was told to drive to a certain Howard Johnson's Restaurant and leave the car unlocked. When he returned to his car the air conditioner was gone.
Other inspectors assigned to the G&G plant were also taken care of. Nadja Hoyer-Booth was given meat for herself and her fellow inspectors, three trunkloads of meat for her mother, three tailor-made suits of clothing for her birthday, two football tickets to a Patriots game, a round trip airplane ticket to New York, and loans of $200 each from Fred iRomano and Frank Ravasini. The loans were so that Nadja could buy her car. When she attempted to repay the money withI her tax refund check, it was not accepted. Fred Romano also entertained Nadja for dinner on occasion and once treated her to a weekend on Cape Cod where she had her portrait done. There were other small and less significant gifts for Nadj a-perfume for exampleall of which were covered, according to testimony by Romano, by petty cash money or Romano's $50 per week expense account at G&G.
While at various times there were other Army inspectors in G&G, Pacheco, Nadja, and another young, inexperienced inspector, Sharon Dalton, were the mainstays.
SLEEPING ON THE JOB
Sharon Dalton had varying duties which more often than not required little of her time. Dalton admitted to subcommittee investigators that she was ill-equipped to perform end-item inspections and did not know enough about meat to oversee in-process inspections. She was usually found in the room just off the manager's office watching television and resting on the sofa.
Dalton further indicated that she never passed her 8-week food inspection course. She stated that her class was doing so poorly, orders came down that no final examination would be administered. While investigators were not able to substantiate this claim, it was learned that this was not an extraordinary occurrence for classes in the past, although it was strongly denied that it occurs presently. Not only does Dalton's claim impugn the training program for vet inspectors, but is another example of ways in which these troops became demoralized. Dalton commented that her lack of training embittered her and made her feel worthless since she had joined the Army in the hopes of learning a skill.
MORE FRINGE BENEFITS
Lonie Eames, another female inspector who sometimes worked at G&G allegedly purchased "hot tires" from an employee at G&G. Someone else also arranged for her to get an inspection sticker for her car. She was the recipient of perfume at Christmas, a lunch or two, and worked for a time on weekends at Fred Romano's brother's bakery.
Steak and egg breakfasts were periodically prepared at the plant in which Hoyer-Booth, Pacheco and Dalton participated. They always had access to the coffee and helped themselves to free donuts whenever they were available.
R~omano and Ravasini threw birthday parties for the Army inspectors, as well as their own mid-management personnel. For these Reidinger drove over from the unit office. Cakes were baked by Fred Romano's brother. Liquor was served and presents exchanged. The girls were given inexpensive perfume- and the men received a bottle of liquor. All of this was to insure "good relations."
"SEND ME BACK To ARTILLERY"
Conscientious inspectors were quickly removed from G&G. Sergeant John Curtain was assigned to G&G for approximately a 6-week period. He noticed that end-item inspections were not being performed properly, lotting procedures were not followed, and he made his complaints known. All samples were being pulled from the top, he said, rather than randomly as required. Curtain found the place mass confusion. As a "re-tread" he was new at the food inspection business, having been recycled out of his chosen field, artillery. Curtain couldn't keep up with bins of meat being shuffled between the various rooms, a practice commonly employed by vendors with a mind toward cheating. When he (lid his end-item inspection he attempted to follow proper procedure. This swiftly earned him a transfer to class 1V inspection (condition, count and temperature) at the nearby Watertown cold storage warehouse.
PERSONA NON GRATA
Sp. 4 Kevin Fagan was never permitted an assignm ent to G&G, even upon his own request to Reidinger. Fagan, transferred to Boston in the springr of 1974, had previously worked at Blue Ribbon. Hie and another fellow inspector were the ones who had blown the whistle on Blue Ribbon, rejecting all products for 6 weeks. On the two occasions he visited G&G Fagan was greeted at the door, escorted through, and rushed out again.
What was going on at G&G for a year and a half permitted the Goldbergs to have a vast competitive edge over all other military meat suppliers. The subcommittee was unable to calculate the amount of money illegally earned by the Goldbergs, but it can be safely estimated that their fraudulent practices netted them in the neighborhood of hundreds of thousands of dollars per week.
FRAUDULENT ACTIVITY OUTLINED
In addition to the practices already outlined1-use of ungraded meat, no USDA certificates for grade, out-of-date beef, and substitution of knuckle for top sirloin butt on grill steaks, G&G and Blue Ribbon engaged in other illegal activities. Th1~ey:
(lid not conduct end-item inspections as required by military
extended the cut on the ribeye into the chuck which allowNed
them to include a cheaper cut with the more expensive cut;
falsely stamped boxes using stamps turned over to them by
used overweight beef carcasses disallowed by specifications
tenderized roasts twice rather than the required three times,
saving on production time.
G&G BECOMES ANOTHER COMPANY
In August 1975 when the findings of the DoD audit team were announced, G&G and Blue Ribbon laid off their employees. Fred Romano arranged for the commercial sale of all meat in the freezer. Since representatives of the Health Services command were in and out of the Boston area and G&G plant from August to October, all, meat was moved into the adjacent, Gerard Freezer, which was not owned by G&G officials and where ungraded meat could be protected from discovery. There was an abortive attempt to reopen the plant in October 1975 but second thoughts prevailed.
In December, Harry and Frank Goldberg sold their equipment to Victor Levinson and S. David Leibowitt of Fairfield, and Weston, Connecticut, respectively. The new company was to be called Trans Country Packing and opened up with the new address of 128 Gerard Street, even though the location was the same as G&G's 100 Norfolk Avenue.
Victor Levinson is an old friend of Harry Goldberg's, and Frank Goldberg is known to have appealed to his former employees and at least one former military inspector to work in the new plant. There was little difficulty for Trans Country to pass the pre-award survey other than a scrutiny of the company's financial backers, a rearrangement of some procedures of operation, and the stipulation that Fred Romano and Steven Goldberg not be part of the management team. So, Frank Ravasini opened up as the new plant manager along with the old G&G core which included: George Ravasini, William "Bull" Johnson, Otis Day and Eddie Booth, all mid-level management personnel.
TRANS COUNTRY SUSPENDED
Then a letter dated April 7, 1976, arrived at Trans Country Packing from the DSA General Counsel's office which stated that Trans Country Packing had been suspended effective that date from its procuring activities with DSA. The reason given was as follows:
This administrative action is taken on the basis of the
suspension of Frank Ravisini, William Johnson and Steven Goldberg, currently key employes of Trans country, for committing irregularities of a serious nature in business dealings with the Government. Specifically, evidence has been received that these individuals, while associates with the G&G Packing Co., participated in the improper substitution of meat products for delivery to the Government under contracts with the Defense Personnel Support Center, a
primary level field activity of this Agency.
Following that action Trans Country ified a $500,000 suit against DSA claiming that the company was "arbitrarily, capriciously and without rational basis"~ suspended from doing business with DSA. The suit is still in the courts.
WEAKNESS IN THE PEE-AWARD
The story about Trans Country demonstrates problems with the Ipre-award process. Investigators found several military officials who were horrified that Trans Country passed the pre-award with Frank Ravasini, Johnson and others from the core group returning to that operation. The Defense Investigative Service had plenty of incriminating evidence against Ravasini and Johnson, yet, apparently, this was not originally correlated with the Defense Contract Services Administration, responsible for the conduct of the pre-award.
Less is known about Blue Ribbon Frozen Foods of Hamden, Connecticut. The subcommittee conducted no on-site investigation in the New Haven area. Knowledge of that plant's workings is drawn from interviews and testimony.
All bidding, payroll and expense payments for both plants were out of Blue Ribbon under the direction of Harry Goldberg. Frank Goldberg ran the Blue Ribbon shop insofar as the day-to-day operation of the plant was concerned. Frank Goldberg knew meat and he was an expert on DoD specifications. He operated the Blue Ribbon plant for many years.
It was not an uncommon practice for Frank Goldberg to take visiting military officers to breakfast, lunch, or dinner. He did. the same for Army inspectors assigned to the plant. Coffee and donuts were often available to anyone working in the plant, and he didn't seem to mind when a letter came down from Colonel Orthy at the Fort Devens MEDDAC stating that organoleptics (tasting tests) were in order for the steaks produced at Blue Ribbon. From that point on, Army in spectors prepared steak lunches in the Army office at noontime, taking home to their freezers what they couldn't eat at work. When food inspector Kevin Fagan was on assignment at Blue Ribbon, Frank twice gave him 8-pound loin strips to take home to his family in Springfield. These were unsolicited by Fagan, and he didn't feel it was wrong to accept them. Fagan aiso borrowed $20 from Frank Goldberg on three occasions, each time repaying the loan.
Inspectors were on such friendly terms with Frank Goldberg that borrowing money from him was not out of the ordinary. Twx~o other inspectors borrowed from him-one, for the sum of $1,000 for the purchase of a motorcycle, and another $2,000 to $3,000 for a van. Both loans were repaid.
AN FBI INVESTIGATION
Pfc. Gerald Knoell, once an inspector at Blue Ribbon, was on especially friendly terms with the Goldbergs. He was caught by his fellow inspectors stamping boxes on the weekends so that Army rejected meat could be recycled. A Blue Ribbon swiss steak contract had been rejected in Tampa., Florida, for temperature. So that the rejected product could be worked back into new contracts for Blue Ribbon, Knoell stamped new boxes for approval. When he was later transferred to Okinawa, Frank and Harry Goldberg threw a farewell party for him at Casey's Restaurant in New Haven. With Knoell's departure, two inspectors reported his unethical behavior. When confronted personally, Knoell had threatened physical violence to the inspectors, so they had chosen to wait until he was transferred. The incident was reported to the FBI and was subsequently investigated by them. No charges were ever filed.
AGAIN NO SUPERVISION
A one-time senior NCOIC in New Haven rarely went to any of the four plants under his charge, preferring instead to remain at home. Inspectors were advised to call him if there was any trouble.
The New Bedford office, which had responsibility for the New Haven unit rarely looked into the goings-on at New Haven. Referring to his NCOIC in the New Bedford unit, one inspector gave this description:
He was a turkey as far as I'm concerned. He knew nothing
about meat. He never showed support. He was scared of his own shadow. He'd walk into a plant-he'd go right up to the office and never walk on the floor; never ask how we felt about our jobs-"Are you doing it correctly?" He never bothered asking these things, and I never saw him until I was there
over a year. 14
Example after example of such dereliction of duty and lack of support to troops in the field were told to staff investigators. And these examples span the whole range of officer and enlisted levels. Without a doubt, it was a major factor in the breakdown of this system. It's not because two or three military officers took money on the side and accepted gifts in exchange for fraud. It is because no one cared. Charles Reidinger stated it best in the following exchange with Senator Wiecker:
Senator WEICKER. Now, during the course of your testimony you indicated on more than one occasion that you gave
14 Subcommittee staff interview.
up and said the hell with it. It is true, however, that the supervision of the Boston area was directly in your charge, is that correct, both as to inspection method, to personnel lists, was
Mr. REIDINGER. Yes, sir.
Senator WEICKER. What I would like to know is before
you reached the point where you said the hell with it, what did you do to assume that the personnel were adequately trained, what did you do in the way of your own inspections
of the plant to see that the rules would be followed?
Mr. REIDINGER. I came to the conclusion that the hell with
it after 3 months, but it took me about 3 months just to see what I was into. I said I got assigned in February; I think it was May when I wrote this memorandum to Fort Devens explaining what the situation was. And it took me this long.
Senator WEICKER. But the situation that you were comnplaining about was the very situation that you helped create,
is that correct?
Mr. REIDINGER. No, the situation was there before, it was
there when I got there, and I was trying to get help and it wasn't there. And I didn't see the help coming from higher up,
I just didn't see it coming. It wasn't there.','
Certainly Reidinger's actions cannot be excused because of the lack of responsiveness he fclt to his needs. But, indeed, much of that lack of support, glaring lack of leadership and failure to supervise permitted and encouraged the fraudulent activities.
The subcommittee held 5 days of public hearings on military meat procurement. (Investigation of Military Meat Procurement, hearings before the Subcommittee on Federal Spending Practices, Efficiency, and Open Government of the Committee on Government Operations, United States Senate, 94th Congress, second session.) A first round of hearings were held on May 10, 12, 13, of 1976. A second, followN-up round was held September 21 and 23 of that same year.
MAY 10, 12 AND 13
The purpose of the first round of hearings was to present the results of the subcommittee's field investigations in the Boston area, determnine the perception held by DoD officials of their priocurement probIcins, ascertain what corrective, actions were contemplated by the Department, and explore corrective steps recommended by the General A ccoun ting office and private vendors.
Oni May 10, the first (lay of hearings, the subcommittee heard froin four- present and former military meat inspectors, a quality conW~Hearings, p. 44.
trol officer from G&G Packing Company of Boston, and a plant manager from Blue Ribbon Frozen Foods of HlamdIen, Connecticut.
Aside from the plant manager, the witnesses testified to the cir-cumnstances which led to the complete collapse of the quality control inspection program within the Boston veterinary unit. Inadlequate housing, pay, training, and inattention by sup~eriors,- to appeals sent through the chain of command for more resources andl help were cited by the inspectors as reasons for the collapse. The inspectors involvement with bribery, fraud, gratuities and p~rostitu tion were recounted.
The quality control officer for G&C told how his comlpanyv took advantage of inadequacies in the DoD procurement system and deCfrauded the government of thousands of dollars daily.
On "May 12 a civilian Army meat expert and1 six Army officers testified. The six officers whose rank ranged from captain to a major general represented the chain of comminandl above the mltiynspectors who had previously spoken.
Tphe mneat expert demonstrated one way the mnilitar-y was dlefraudled. Test results performed at Natick laboratories revealed muscle substitution on grill steaks taken from a nation-wide beef audit. A n inferior muscle "the knuckle" was substituted to replace a contractual specified "sirloin butt." The price differential per pound was estimated to be $2.
The captain expressed his opinion that the doctor of veterinary science degree (lid not prepare veterinary officers for tasks related to quality control of product specifications on food. Training within the service was also inadequate, lie spoke of his awareness of an officer and noncommissioned personnel playing cards and neglecting their duties. He professed awareness of instances where appeals for hell) sent up the chain of command went unheeded and described the low morale of the Boston veterinary unit.
The other five Army officers constituted a panel. Prepared testimony from the panel described the Army Veterinary Service including its six functional roles, of which quality assurance inspections and sanitary inspections of food source establishments wats merely one. Specific reference was made to the split responsibility between Defense Personnel Support Center (DPSC) and Health Services Command for the quality assurance function and to the DoD policy objective to rely upon a contractor's quality control results to the maximum possible extent.
Subcommittee members questioned the panel on several issues presented in previous testimony. Members asked each panel participant in the chain of command who was accountable for responding to appeals for help and repeated signals that problems existed. The responses revealed mixed and -conf used accountability.
Senator Chiles questioned the panel on why military specifications were so complex, why prices of military beef products were so much higher than what~ the housewife could buy in the supermarket, and why there was so little competition between vendors in the military beef market. The Senator also queriedl why the same set of actors who operated the G&G Plant could be involved in establishing a new
company, Trans Country. Trans Country had passed a pre-award survey and was eligible for government contracts.
During the third day of hearings six witnesses were heard. The General Accounting Office presented the results of its study on DOD procurement of beef that had been requested by the subcommittee. Frank Bauer, the vendor whose observations of the military meat market had precipitated the investigation, made suggestions intended to improve the military's buying and quality assurance practices. Abe Cohen, another vendor from Bo3ston affirmed Mr. Bauer's views.
The former general manager of G&G Packing Company testified under a grant of congressional use immunity and recounted his knowledge of how G&G Packing Company and its officials took advantage of the military system and ripped off the military. The plant managerof Blue Ribbon Frozen Foods denied any knowledge of abuses perpetrated by the company.
The Deputy Assistant Secretary of Defense for Supply, Maintenance, and Services, and Assistant Secretary of the Army for Manpower and Reserve Affairs appeared together and informed the subcommittee of steps the Secretary's Office and the Department of the Army planned to take.
General Accounting Office
The General Accounting Office commented that DoD specifications for beef products were more stringent than required to meet the needs of the military services; that the inspection program for beef was not effective; and that DoD contracting -procedures needed tobe improved. The GAO found that stringent req-uirements of the beef specifications inhibited many meat packers from competing for defense contracts and .contributed directly to the high cost of beef purchased by the military.
Price comparisons between meat bought by the military and other government agencies such as the Veterans Administration (VA) and the Department of Agriculture who used the more commercially oriented "institutional meat purchase specifications," (IMPS), revealed the cost of beef to be lower to the VA and the USDA. For example, on the same day in October 1975 DoD and VA awarded contracts for about 30,000 pounds of diced beef. DoD paid $1.54 per pound and VA paid $1.12 per pound-a 42 cent difference. The General Accounting Office estimated that DoD could have saved $9.4 million in fiscal year 1975 on two items alone, diced beef and pot roasts, if the commercially oriented specifications were employed.
The GAO further found the operations of the Defense Personnel Support Center (DPSC) to be lax. The Center's responsibility to periodically evaluate contractors quality assurance systems was not performed. inefficient buying practices contributed to unnecessary overhead and were susceptible to favoritism and auctioneering when employedl. Negotiated price adjustments on accepted, nonconforming products were numerous and amounted to a mere 1 percent. Competition for beef contracts was not obtained. Mr. Frank Bauer
Mr. Bauer supported the GAO conclusion that industry specifications acceptable to other agencies of government and comparable to
military specifications were available at substantially lower prices. '- rr. Bauer produced similar items for both military and USDA pro(,r.,ms and had experience with the inspectors andl quality assuralnce~s systemsrn of each agency. He preferred the USDA system of 10 percent inprocess inspection, lie found the meat graders. of USDA to be better trained an(1 the USDA system more effective and efficient.
Tphe USDA acceptance programs achieved inl one inlspectionl process what the military required in four duplicative inspection processes: in-process and end-item inspections by both the military and the vendor.
Mr. Bauer was asked by the subcommittee whether he had p~reviously registered his complaints and observations to military officials. He provided a letter dated May 13, 1971, to DPSC wherein his coinpany described problems they experienced with the military system and suggested improvements in at positive manner. Tphe letter addressed, among other things, difficulties caused due to the sp)lit responisibility for quality assurance between veterinary and DPSC personnel. No discernible attention was paid by DPSC officials to the thoughtful critique. Mr. Bauier further noted that he had been prompted to contact the subcommittee after he received a Catch-22 letter from military official in response to issues he raised concerning the production and inspection of diced beef.
Mr. Bauer demonstrated how his own production andl market analyses in late 1974 led hi.*m to suspect something was wrong in the system. Raw material costs alone were higher than what the military was paying for its fabricated beef items. He queried why the Government buyers, who had the same information he had, did not know what he suspected.
Mr. Romano described how G&G's operations worked to cheat the government. He told of price fixing, substitution of choice meat by inferior and ungraded beef, substitution of muscle cuts, extending the proper length of muscles used gratuities, recycling rejected meat and unauthorized use of the Army acceptance stamp. Mr. Romano explained what individuals did what in the G&G operation to "completely override" the military inspection system. Ass istant Secretaries
Paul Riley, the Deputy Assistant Secretary of Defense for Supply, Maintenance and Services was the top official within DoD to testify. Mr. Riley expressed his belief that "the Boston situation is kind of unique." He did assure the subcommittee the DoD ". . ANill fix whatever problems we have." His office had initiated a task force study to evaluate the systemic aspects of subsistance procurement and a Defense Investigative Survey to examine criminal allegations. Action upon the results of the two efforts would be taken.
Deputy Assistant Secretary Paul D. Phillips represented the Secretiary of the Army and announced the formation of an ad hoe gecneral officer level committee with a chairman from the Army Secretariat to perform its own examination, see to it that appropriate recommendations are implemented, and to direct Inspector General or other types of investigation and audits to take place. The See-
retary of the Army placed the entire Inspector General capabilities in support of the general officer committee.
SEPTEMBER 21 AND 23
Both the Army general officer and the DoD task group reports were completedd in August of 1976. The primary purpose of the second roundly of hearings, held 1 month later, was to hear from top officials within the military structure what conclusions and recommendations were made and what steps to implement the recommendations would be taken. Word of similar procurement problems overseas and a "Project Seven Seas" investigation led Chairman Chiles to also request a briefing from Lieutenant General Woodrow W. Vaughn, the Director of the Defense Supply Agency.
Private testimony in July of 1975 by John Coplin, the Chicago main station supervisor for the Department of Agriculture's Meat Grading Branch had been received by the subcommittee. Mr. Coplin told of his first hand knowledge of abuses in the military procurement system. Shortly thereafter, he was disciplined by the Department of Agricultutre for improperly submitting travel vouchers. Several ,Agricult ural Department officials wNere questioned to determine if retaliatory action had been taken by Mr. Coplin's superiors.
On September 21 Deputy Assistant Secretaries Riley and Phillips; Major General Spurgeon Neel, Commander, U.S. Army Health Services Command; Porter Walton, Executive Director, Procurement and Production Directorate, Defense Su pply Agency, and Rear Admiral John Shepard, Commander Defense Personnel Support Center, constituted a panel before the subcommittee.
Secretary Riley indicated that of the DoD task group report's 84 recommendations had been implemented. He noted in the area of procurement and supply, recommendations were made to simpl1ify lprocurenient (locumnents reqluiredl by both subsistence contractors andl product inspectors. Tlhe DSA should monitor award, performance andl product (lata to identify potential problems which could adversely affect the support process. A system to provide contracting officers with information on past and current contract performance was also recommended.
AMr. Riley stated that the adoption of indefinite delivery-type contracts was being considered. lie assured the members that DSA would attempt to expand the competitive base for subsistence items. lie goreed1 with criticisms that military purchasing specifications were too restrictive and announced a test plan with the USDA which would dletermnine whether the use of institutional meat purchase specifications (IMPS) were practicable for military use. Results of the test would be available 'within six months.
1In res piise to qulestionls concerning responsibility for recommendlations from both the DoD and Army reports, Mr. Riley remarked that OS1D would id ent ifyv recommendations OSD could take action on, ,ind those wv~hich would be acted up)on by the .military departments,. 081) intended, to set up) a mechanism to is sign responsibili ties for
each recommendation from both reports and follow through to make sure all were thoroughly reviewed.
Secretary Phillips presented conclusions of the ad hoc general officer committee. A variety of systemic weaknesses at all levels caused the DoD procurement system to break down. In the Afi, the Health Services Command (lid not provide adequate supervision of in-plant quality assurance inspections. Effective coord Iination between inspect tion and procurement elements was not maintained. An unacceptable situation developed because of a combination of circumstances which included limited resources, supervisory failures, and omission of lprope i' coordination, all of which could and should have been detected by ail effective system of command andl technical audits.
Of the Army committee's 83 recommendations, 63 were to be implemented by the Army. The other 231 were to be sent to OSD for coordination. Mr. Phillips commented emphlatically that the Secretary of the Army felt strongly, now that system irregularities had been detected, recommendations made, and actions taken to to correct these irregulari ties, that continuation of the same system problems would be considered an abrogation of command responsibility. He insisted that applrolpriate disciplinary action at the highest levels in the Army be taken.
Mr. Phillips highlighted the Army recommendation to the Secretary of Defense that the Ar'my be relieved of in-plant inspections, and that the DoD subsistence inspection be accomplished by other agencies of the Federal Government.
Mr. Walton pointed to two measures undertaken by DSA headquarters to assure progress in improving the entire subsistence procurement operation. Thle Director of DSA had instructed the DSA. Inspector General to visit all activities concerned with DPSC's procurement of subsistence, including contractor's food processing plants. Any deficiencies or improprieties notedl were to be actedt upon. Secondly, the DSA Command Security Office had increased its involvement with other investigative services to facilitate exchange andl coordination of information relating to abuses within the system.
Admiral Shepard detailed new OSD policy guidance on acceptance and/1or rejection of nonconforming perishable meat pro(Iucts: rejection of nonconforming supplies would be performed by veterinary personnel within the producing plants instead of the contracting officer; and all "major" nonconformances would be rejected. Price adjustments on minor nonconformances would continue to be allowed.
Tfhe Admiral listed other steps taken by DPSC to meet the recoinmnendations of the DoD task group In the areas of quality assurance and contract management. A mand atory monthly review of contractor performance files was established. The review and approval levels for decisions on nonconforming contracts were elevated. A management information system of key indicators for meat designed to identify important trends andl potential problem areas,- was developed. In addition, DPSC had met with Veterans Administration and Department of Agriculture personnel to compare their procurement programs. As a result, modifications to procurement practices were under consideration.
Senator Chiles questioned the panel on whether anyone would listen if a field personnel or businessman blew the whistle on the system in the future.
Mr. Walton noted the increased sensitivity of the DSA Inspector General to such problems and the active program of visits that the Inspector General office would undertake to seek out potential deficiencies. Secretary Phillips described how the Army had taken steps to insure that veterinary personnel were familiar with whistle-blowing procedures. Secretary Riley indicated that he would listen.
The Senator concluded the panel questioning by remarking:
Whether we have made any overall correction or not, I
guess we will have to wait and see. I am convinced that this is an area that everybody, the troops and the taxpayers, are vitally concerned that we (10 a good job, that we do provide
the best kind of food that we possibly can for our troops.
And, at the same time, get the best break that we can for
our t axpayers. I think it is exactly as the Army report puts out, it is a management function, a command responsibility.
We can say all we want to about how it can occur. But
whether or not it is going to occur in the future is going to depend on what kind of command responsibility you and
people in your position are going to exercise.
On September 23, Lieutenant General Vaughn, Director of the Defense Supply Agency testified on Operation Seven Seas.
The General became the DSA Director in January of 1976. The subcommittee investigation was one of the first items to come to his attention. He took the initiative to inquire if any irregularities had been identified overseas. Based on information that the Air Force Office of Investigations had identified such problems, he requested a crime prevention survey of the procurement of beef in Europe.
General Vaughn listed findings of two interim reports he had received to (late. Two significant findings were the failure to clearly define who has the responsibility for product rejection-follow-up on nonconf orming products-and that veterinary personnel were not adequately trained. Director Vaughn concluded that systemic procurement problems in Europe were similar to those disclosed by the subcommittee investigation and that he would take corrective action. John Goplim
In order to determine whether retaliatory action was taken against Mr. Coplin for privately testifying to the subcommittee, the following past and present Departmnent of Agriculture officials were questioned: John Coplin, Chicago main station supervisor, metgrdngbanh Larry ThRackston, director, personnel division, Agriculture MN arketing Service; David Ilallett, chief, meat grading branch; John Tromer, former (lire ctor, personnel division, Agric ultutre Marketing Service.
Mr. rplackstoil had upheld charges of neglect of duty, fail ure to follow instructions after a formal hearing. At subcommittee request, Mr. Tromner, a retired personnel director of the Marketing Service reviewed the same facts. Mr. Troiner indicated that he diametrically disagreed with Mr. 'lhackston on two significant points which led him to conclude that the charge should not be upheld. Mr. TIhatckston had declared whether Coplin's superior had approved of his actions and
Mr. Cophn's intent in the twitter were not swgifieant. In Mr. Iromer's judgement, they were (leternmining factors.
The Coplin personnel decision was subject to two a(llitional reviews following Thackston's. During questioning, pertinent evi(lenice from Marketing Service's own personnel files, which ws not consilereld ill any of the three reviews was revealed. Mr. Hallet, Coplin's superior, denied any relationship between the Coplin testimony and his involvement in the personnel decision.
Senator Chiles concluded the hearing by stating his continuing concern and intention to ask the Agriculture Department to again review the case and the hearing record.
POST 1976 ACTIVITIES
The subcommittee investigation and hearings of 1976 demonstrated the need for reform of DoD's procurement system for food. While the subcommittee did not conduct any additional field investigations, it monitored and encouraged steps to improve the system.
The Defense Investigative Service, working together with the Justice Department, continues the nationwide criminal investigation. The DoD continues to review and implement its own study recommendations. The General Accounting Office, at the Chairman's request, monitored DoD's progress.
Also at Senator Chiles' request the Office of Federal Procurement Policy undertook a significant initiative to bring about governmentwide food procurement reforms. In January of 1977 President Carter and the new administration took office. New individuals assumed positions of responsibility and reorganizations are ongoing. These changes have worked to influence the priority and emphasis given to activities to improve the government's procurement of food. The following is a summary of significant actions since the subcommittee's hearings.
TIHE OFFICE OF FEDERAL PROCUREMENT POLICY (OFPP)
On July 30, 1976, the Administrator for Federal Procurement Policy requested the Secretary of Agriculture to assume full responsibility for developing an executive branch plan for a government-wide quality assurance program for food procured by Federal agencies. The Secretary delegated this responsibility to the Administrator of the Agricultural Marketing Service (AMS). An Interagency Food Quality Assurance Planning Committee was established to carry out the assignment. The Administrator of AMS served as the chairman. Representatives from the Department of Commerce, Department of Defense, Department of Health, Education and Welfare, and Veterans Administration as well as a nonvoting, ex officio representative from OFPP made up the rest of the committee.6
In April President Carter nominated Lester A. Fettig, former staff director of the Senate Subcommittee on Federal Spending Practices and Open Government of the Committee on Governmental Affairs,
,1 See Appendix F.
to become the new Administrator of OFPP. At his Senate confirmation hearings Mr. Fettig discussed the top priorities ahead for the office. He cited the establishment of consolidated purchasing systems. for perishable food, including meat, as a priority objective for the office.
On May 10, the Interagency Planning Committee delivered to the OFPP Administrator for his approval a recommended executive branch plan for a government-wide food quality assurance. program. The plan represented an agreement by the represented agencies of how the Federal Government should proceed to implement the committee's own recommendations that a grovernment-wide quality assurance system and a government-wide food specification system be developed and managed by the Department of Agriculture.
In July the new Administrator approved the plan and requestedl that the Secretary of Agriculture accept lead agency responsibility for both the government-wide quality assurance and food specification systems, lie also requested that the Secretary accept responsibility for establishing a government-wide system to provide useable and timely food marketing information to enable procurement officers to buy at the best price. Trhe Secretary agreed to implement and manage the three programs.
The Interagency Quality Assurance Planning Committee concluded that U.S.D.A. should assume the in-plant inspection (duties presently performed by veterinary personnel for DoD prociirements. The executive branch plan envisions that, the planning committee will be reconstituted as the implementation committee. With the Department of Argiculture at the reins, the committee is to establish procedlures and insure interagency cooperation to accomplish its objectives. The Secretary of Argiculture is to provide the Office of Federal Procurement Policy an implementation schedule with major milestones for fiscal year 1978 by the end of January 1978.
A SECOND DoD AUDIT
In April of 1977 Lieutenant General Vaughn, the Director of DLA, initiated a second nationwide audit of fabricated beef products within DLA's inventory. Several system improvements had been made since the first audlit, and in order to assess the effects upon the quality of the products in the military supply system, a special quality audit was completed during the period 17 March to 1 April. Tlh1e procedures used in this audit were as close as practical to those usedl in the audit conducted in July-August of 1975 at the request of the subcommittee. (One exception related to "diced beef". Tfhe 1977 audit set the rminmum piece weight for "fines" at 3/ ounce instead of the previous ounce.)
Results of the special audit revealed no indications of overt fraud or gross substitutions of grade or muscle cuts. Neither was unwholesome or contaminated meat detectedd. However, 27.6 percent of the product audited was still found to be nonconforming to contractual specifications. Again, all products found nonconforming during the audlit had been previously tested and found conforming by both inp~lant military and company inspectors.
NATIONWIDE CRIMINAL INVESTIGATION'
Four principal indictments have resulted from the nationwide cim-,inal investigation by the Defense Investigative Service and the Department of Justice. Criminal investigations and grand jury proceedings continue.
As a result of Boston area investigation, a 51 count indictment was issued against G&G Packing Company, of Roxbury, Massachusetts; Blue Ribbon Frozen Food Corporation of New Hamden, Connecticut, and related principals, Harry Goldberg, David Frank Goldberg, Ferdinand Romano, and Francisco Ravasini. All defendants pledI guilty to or were convicted of charges to defraud the government and/ or bribery and gratuities. Charles Reidinger and Manuel Pacheco, former inspectors in the two plants, also pled guilty to accepting bribes in separate proceedings.
in addition, a 7-count indictment charging fraud was issued against Arthur Lang, owner of Central Beef Corporation, a company which formerly supplied the military, and Ferdinand Romano and Francisco Ravasini, former employees. Mr. Ravasini pled guilty to defrauding the government. Mr. Lang and Mr. Romano await trial.
An investigation in Paris, Texas resulted in two in(lictments. A 38-count indictment against a U.S.D.A. meat inspector assigned to conduct inspections at the plant facilities of Stevens Foods, Incorporated charged a Robert Mullens with perjury and acceptance of bribes. The second indictment amounted to 52 counts and charged Stevens Foods, Incorporated, of Paris, Texas; its owner, Steve Aaron; and six plant managers with fraud and bribery. Mr. Mullens was convicted of accepting bribes; the others await trial.
In Chicago, grand jury proceedings related to a company which supplies the military are ongoing. In Southern California, DIS investigations have been taken over by the Federal Bureau of Investigation.
An institutional result of the overall investigation has been the establishment of strong relationships that did not previously exist between the Defense Investigative Service, the Justice Department, Defense Contract Audit Agency, and the Defense Logistics Agency. An interdisciplinary, task force approach, where the various personnel skills and resources possessed by all the agencies may be applied to the investigation of allegations can now be utilized by prosecutors. The ability of the Defense Supply Agency and its component, the Defense Personnel Support Center, to take administrative action to protect the government's interest is enhanced.
A second result has been improved coordination among DoD investigative, and audit components to enable the DLA and its component, DPSC to enhance administrative action to protect the government's interest through disbarment, am contract warranty proceedings.
DoD TASK GROUP AND ARMY REPORT FOLLOW-UP
The Office of the Assistant Secretary of Defense for Installation and Logistics has been reorganized. The food service function remains with the Deputy Assistant Secretary for Supply, Maintenance aiid Services, DASD (SM&S), within the new office of the Assistant Secretary for Manpower, Reserve Affairs, and Logistics.
As promised in the September hearings Secretary Riley, DASD (SMV&S) established a mechanism to track the review and umplementation progress of the recommendations from the two reports. Progress reports are compiled quarterly.
Both reports recommended that the allocation of resources to the foodl service function at the OSD level be reevaluated with the objective of strengthening the function. Personnel resources to the OSD function have not been strengthened. In December certain OSD responsibilities were transferred to the Defense Logistics Agency.
Trhe Director of Supply Management Policy within DASD (SM&S) was assigned the chairmanship of the Food Planning Board. In addition, the board was required to approve of actions taken by its coinrmttees. DPSC was given voting rights on the Armed Forces Product Evaluation Committee.
The task group madle eight recommendations and the Army cornmnittee madIe four relating to development of a comprehensive, integrated, management system to correct such problems as incomplete, untimely contreactor performance files. DLA has assigned a project manager to design an overall worlidie system that will incorporate these systems. It will not be operational until 1980.
The reports contained several recommendations that military specifications be expeditiously reviewed for continued need. The DoD Food Planning Board is reviewing specifications on a case by case basis. Secretary Riley announced in the September hearings that DoD would conduct with USDA a trial test of institutional meat purchase specifications (IMPS) for troop feeding. He indicated that results of the test were anticipated in six months. In July 1977 an initial award by the test program was made. Final results are now anticipated in April of 1978. In the interim, DoD continues to employ specialized military specifications.
In the inspection area, increased training is being provided to veterinary corps inspectors. Training courses include treatment of ethical conduct by inspectors. A new Army practice is that inspectors will not be assigned to in-plant source inspections for their first tour of duty after graduating from their basic training course. Action on the recommendation to p~rovidle extra compensation for enlisted personnel working in high-cost metropolitan areas was deniedl by OASD (MRA&L) in April 1977. The recommendation to give in-plant insp~ectors the authority to reject on their own nonconforming products has been instituted.
The DPSC has idlentifledl those storage facilities where inspection facilities are not adequate. By July of 1978 all 18 cold storage warehouses which are leased by DoD will have contract clauses requiring proper facilities. Cheatham Annex's inspect ion facility remains inadequate.
Recommend at ions (1irectedl towards stimulating competition by actively soliciting participation by contractors and by simplifying contracts have not resulted. in a larger competitive base for contracts. Instead, the number of bidders declined from 31 during July 1975, to 24 in July 1976 and 22 in July 1977.
Both reports recommended that DPSC discontinue the practice of buing beef on a daily basis. One alternative to daily buying offered by the DoD task group was to use indefinite delivery type contracts
(IDTC). The recommendation sought to achieve the long-range b)enefits of having a better, more viable competitive base and( to realize savings in administrative costs to both the contractor anI government.
After studying the IDT( method, DPS( determinedd that this type of contract method would not be use(l in purchasing military beef because of concerns registered by vendors. Instead, DPSC is conducting a procurement test utilizing requirements for firm quantitites and deliveries covering a specific 632,000 pounds of beef to be delivered to Columbia, South Carolina; Kansas City, Missouri; and San Diego, California, with three deliveries to each location over a 90-day time frame.
Although weekly buys are under consideration, no tests are being conducted by DPSC on other buying methods such as weekly, biweekly or monthly.
Several recommendations addressed improving contract administration. DPSC has taken successul steps to improve the timeliness of payments. Decisions to accept nonconforming pro(lduciets are now receiving more and higher management attention. Stricter policy has been implemented on price adjustments for nonconforming products. DPSC is developing a technique to remove from the contractor all profit associated with nonconforming lots. In June of 1977 a "hot line" was installed at DPSC, Philadelphia to expedite handling of complaints from military personnel.
During congressional deliberations on the fiscal year 1978 appropriations bill for the Department of Defense, consideration was given to whether the inspection function for meat and food products procured by the Department should be done by the Department of Agriculture. Conferees of a conference committee of the Senate and House on the DoD appropriations bill agreed that the responsibility for inspection of meat and food products now being done by Army and Air Force veterinary personnel should be transferred as expeditiously as possible to USDA. The conferees further agreed that the transition should begin in fiscal year 1978 and that the Army should assume origin inspection responsibilities presently performed by the Air Force in order to facilitate the transfer.
After the September hearings the Department of Agriculture initiated an investigation into the personnel action against John Coplin. In April of 1977 Senator Chiles wrote to the new Secretary of Agriculture, Mr. Bob Bergland, and reviewed the sequence of events that led to his concern that retaliatory action had been taken against Mr. Coplin for his private testimony.7
Assistant Secretary for Food and Consumer Services, Carol Tu(ker Foreman responded for the Secretary to the Senator s hortly thereafter.', She announced the decision to rescind a 5-day without pay suspension of Mr. Coplin and to remove all references to the su pen17 See Appendix L.
Is See Appendix N.
sion from his official personnel files. Secretary Foreman stated that the Department will not permit even the appearance of retaliatory action against employees who cooperate with congressional oversight of Department operations.
Departmental review of other substantive issues concerning the management of USDA's meat grading services raised by the September 23 hearing continues.
FINDINGS AND RECOMMENDATIONS
During the May 1976 hearings the subcommittee brought national attention to the scandalous manner beef was purchased for our nation's servicemen and women. At the oversight hearings the following September, Senator Chiles reflected that before either the DoD task force or the criminal investigation showed much life, the subcommittee found that leadership within the military was not taking the problem seriously. Rumblings heard from the Pentagon were that the problems had popped up before, things were not that bad, and Boston, where the subcommittee had conducted field investigations, was unlike anywhere else in the country.
The subcommittee totally rejected that attitude. Its own findings, as well as the cumulative findings of the DoD task group, the ad hoc Army committee, the two DoD nationwide audits, the General Accounting Office, the Joint Defense Investigative Services-Justice Department criminal investigation and the Office of Federal Procurement Policy initiated Interagency Food Quality Committee, demonstrate conclusively that problems existed throughout the DoD procurement system for food. The Boston story was not about a few isolated crooks or a couple of debaunched military inspectors. Boston was symptomatic of bigger problems.
Competition among vendors was not operating as a check on the system. Competition in the marketplace for beef contracts (lid not exist. That is the subcommittee's single, most important find(ling. Of the country's 2,500 meat packers, only a handful even bothered to bid on military contracts. The military relied on a select few vendors for its needs, even when it knew vendors were cheating.
The beef specifications were the major reason for the lack of a conmpetitive base. iThe planners and specification writers who determine( the needs of the separate military services created unnecessarily rigid and complex "specs" which were out of line with commercially accepted practices. Most business people chose not to obtain the special equipment or go through the red tape headaches required to produce for the military.
Poor buying aindi enforcement practices contributed to a noncompetitive marketplace where unscrupulous vendors were aware they could cheat. Price adjustments on nonconforming products were a farce. Marketplace signals which said that prices paid were less than the raw material costs involved were ignored. inadequate training of veterinary ins)etoIs and con fused, rn isuii(lerstood lines of connmmand wrecked the military's quality control system.
The year 1977 brought a new administration with new people III positions of responsibility. Subcommittee pr~o(dding brought about t initiatives to reform the way all government agencies, not just t he Department of Defense, buy food. The Secretary of Agriculture will develop and manage a government-wide food specification program to be used by agencies which buy food. New federal specifications will be as close as possible to commercially accepted practices.
Under the Secretary's leadership, U.S.D.A. personnel will be responsible for all food quality inspections. The Veterinary Corps wvilt no longer perform inspections inside meat packing plants.
The Agriculture Department will also coordinate marketplace information for agencies buying food. The Office of Federal Procurement Policy will use its position within the President's executive office to assist Agriculture's management of governmcnt-wi( e procuremnent activities.
The three initiatives represent new responsibilities for the Secretary of Agriculture. Other agencies which buy food, particularly the Department of Defense, will need to work hand in hand with Agriculture officials. Now that the limelight is gone, the idea that the situation in Boston was unique must not be p~ermittedl to resurrect itself and delay reform efforts. Present leadership within the executive branch must avoid the attitude that "business as usual" may start. The challenge ahead is to achieve the objectives set out by the three new programs.
Sustained, high level attention by the executive branch and Congress will continue to be needed if the government i,: to provide both good food in its procurement programs and the best (deal for the taxpayers. A good indicator of success will be the extent to which more suppliers chose to participate in the government marketplace for food.
More specific findings andl recommendations follow. The subcommittee wishes to be a constructive agent in reforming government procurement practices and the recommendations are madIe in that spirit.
ELIMINATE THE BARRIER TO COMPETITION
Finding No. 1
Unnecessarily rigid military s pecificat ions for beef inhibit competition for military contract awards, contribute to increased costs for beef items over comparable commercial beef items, and hinder effective quality assurance proced ures.
Very little uniformity and coordination exist's among differentn, agencies of the Federal Government in their use of meat and, other foo.,l specifications. Thlis adds to government costs, creates confusion and discouragess suppliers to the government. Recommendation (s)
The Secretary of Agriculture, in conjunction with affected agencies, should establish performance objectives and timetables to be met in order to expedite and make operational a. single food specification system for agency use. To the extent practicable, commercially accepted products should be relied upon to meet agency needs. Industry input (luring the developmental stages of food specifications should be obtained.
The Appropriations Committees of the House and Senate should insure that adequate resources are available to the Secretary so timetables may be accomplished. The cost savings to be achieved as a result of agency use of a unified food specification system should be documented.
The DoD justification for food specifications that differ from comparable commercial products is that the military services believe that commercial' products are not adequate to meet their requirements. Both the DoD task force and the Army committee recommended that present military specifications for meat and other foods be reviewed for content and need. The General Accounting Office study strongly recommended to DoD that the use of commercially accepted specifications be considered.
The subcommittee observed that the planners and specification writers within the system emphasized the special requirements of the services to the detriment of cost and serviceability considerations. The emphasis must be shifted, when a family shopper can purchase the same cut of beef as the military for a third to a half of the price.
The subcommittee recognizes the logistical complexity and interagency coordination needed to develop and maintain a unified food specification system. Adequate resources, and attention by top management of all the affected agencies to established performance objectives and timetables will be required. The potential cost savings associated with the government annual purchase of $3.5 billion of food merit the needed attention.
MAKE COMPETITION IN THE MARKETPLACE A GOAL
Finding No. 2
The lack of a competitive base for military beef contracts places the government in a position of unhealthy and expensive reliance on a selected few suppliers and directly contributes to increased costs. Effective competition among suppliers for beef contracts is the best check on the system.
The Commander of the Defense Personnel Support Center should take steps to expand the competitive base for meat contracts. He. should establish performance objectives and timetables to achieve this goal.
The Assistant Secretary for Manpower, Reserve Affairs, and Logistics should periodically review DPSC's accomplishments and assess whether its )erformance impact DoD 0ood service policy. The Assistant Secretarv should give special attention to any resistance by the individual military services to use food specilfications developed by the Secret ary of Agrictilture's federal food specification program. Discussion
Il suibcommi ttee be: ieves that an adequate competitive base for tee'I coltracths i essential to protect the government's interest and obtain the bIest j)rices. Out of an estimated 2,500 processors of beef' l)roducts, 55 did ltv;iness w, ith DoD, and 1:3 su)pied 84 percent of
the troop-issue beef in fiscal 1975. On particular beef items, sucil as diced or ground beef, the number of suppliers participating is less.
Reliance on a few suppliers has led to DPSC concerns of simply failures. Since DPSC's primary mission is to supply the military' services, the inability to choose among several potential suppllircs has contributed to the acceptance of nonconforming products. Willingness to take administrative action against vendors who may take advantage I of their position is hampered. Willingness to accept high prIces is encouraged.
The subcommittee further believes that DoD measures to adopt more commercially oriented specifications to meet service requirements will compliment efforts to expand the competitive base for contract awards. The ability of DPSC to obtain better competition may depend on what specifications are employed.
USE MARKETPLACE SIGNALS
Finding No. 3
Private vendors were able to calculate raw material costs for beef contracts from publicly available and wvidelv circulated marketing information, compare the costs to prices paid, and determinee that something was drastically wrong with DOD's procurement system.
The Departments of Agriculture and Defense and the Veterans Administration do not coordinate either their parchiases of food or the market information they employ. Recommendation (s)
The Commander of the Defense Support Supply Center should take steps to insure that adequate marketplace analysis of military meat contract bids are made. The technique of calculating raw material costs for beef contracts and comparing them to prices bid should be used as a check on the procurement system. If prices bid are repeatedly below raw material costs, something is wrong.
The Secretary of Agriculture should establish performance objectives and timetables to be met in developing a food market information system in order to expedite agency use and coordination of relevant market information not presently employed. Industry input in the development of the system should be obtained. The system should be ready for use within a year. Discussion
Frank Bauer, a Miami vendor, testified that his company considered producing grill steaks for the military in late 1974 but concluded that prices paid by the government were less than raw material costs. From Mr. Romano, the plant manager of G&G Packing Company, the subcommittee learned that this calculation corresponded min time to the start of gross substitution practices in the plant. Subcommittee investigators determined that other vendors had made similar calculations. Everyone seemed to suspect what the buying agents for DPSC did not, prices were out of kilter for a reason. This need not occur again if simple price analyses are performed.
The DOD task force and the OFPP initiated interagency planning committee for more effective use of market information made numerous recommendations to enable procurement agencies to take better advantage of "buyers" markets and avoid creating "sellers" markets.
Interagency coordination and better use of market pricing sheets present the potential for considerable savings by procurement agencies. For example, the DOD task force noted for economic price adjustments on indefinite type contracts for red meat, reliance upon a single industry price sheet instead of averaging of prices by competitive reporting services led to higher costs for the government.
CONSOLIDATE RESPONSIBILITY FOR INSPECTIONS
Finding No. 4
The veterinary corps of the military services are not properly trained to effectively perform in-plant, at origin, quality assurance inspections for beef products. Duplication and overlap exist between the Department of Defense and Department of Agriculture quality assurance functions for food purchased by the Federal Government within the continental United States. Considerable cost savings exist in consolidating these quality assurance functions so that all agencies and industry may benefit from a unified government-wide quality
The Administrator of the Office of Federal Procurement Policy's recent action to establish such a government-wide quality assurance system and the Secretary of Agriculture's assumption of responsibility to develop and manage this system are sound and in the government's best interest. The mandate given by the Appropriations Committees of the Congress that the veterinary corps responsibility for in-plant quality assurance function be transferred to USDA and that the transition start in fiscal 1978 is consistent with this initiative. Recommendation(s)
The Secretary of Agriculture, in conjunction with the Secretary of Defense should establish performance objectives and timetables to be met by both agencies in order to insure an orderly and effective transition within a year.
The Appropriations Committees of the House and the Senate should insure that adequate resources are available to the Secretary of Agriculture so timetables established may be accomplished.
The cost savings to be achieved by the transition and consolidation shoulld be documented.
The Veterinary Corps of the Army and Air Force have several missions to fulfill for our nations defense. Responsibility for food hygiene and quality assurance inspections is the only function directly related to the Department of Defense's system of procurement of meat items. Within continental United States DoD already relies extensively
upon the USDA for sanitary inspections of food source establishments. The career orientation of USDA inspectors contrasts with the (lemoralization of many veterinary officers who find themselves in quality assurance work and( iiinadequately trained noncommissioned personnel. M moreover, the subcommittee determined that similar USDA quality control functions were performed( more economically.
The subcommittee recognizes the logistical difficulties associated with the transfer of functions. High priority must be given to the sucessful transition and operation of a government-wide quality
assurance system by the Secretaries of Agriculture and Defense and the responsible committees of the Congress. As the subcommittee has documented, inadequate attention to quality assurance systems enable million dollar "rip-offs" from taxpayers.
RETHINK HOW TO IDENTIFY AND PROSECUTE CROOKS
finding No. 5
The Joint Defense Investigative Services-Justice Department military meat investigation identified and successfully prosecuted criminal activity in DoD's procurement programs where previous investigations failed.
The task force concept employed by the special investigation contributed to overcoming past barriers. Direct referrals to the Justice Department and the use of professional skills and program awareness of personnel from various contracting, audit, and investigative components throughout DoD can significantly impact the Justice Departments ability to better understand and handle criminal activity in DoD procurement programs. Recommendation (s)
The Secretary of Defense and the Attorney General should jointly examine lessons learned by the special Joint Defense Investigative Service-Department of Justice meat investigation. New relationships between investigative, audit and procurement components of DoD and DoJ that contribute to more effective identification and prosecution of criminal activity in DoD procurements should be formalized.
The 1955 Memorandum of Understanding between DoJ and DoD governing present interagency coordination needs to be updated and rewritten. Any statutory barriers that inhibit interagency coordination should be identified and reported to the appropriate committees of the Congress.
Previous to the establishment of the special DoD investigative task force the subcommittee found that several past allegations of wrongdoing in the Boston area were investigated by: military investigators and several referrals to the Federal Bureau of Investigation (FBI) had been made. Individuals and companies associated with the charges, and the nature of the alleged wrongdoing were similar to the subcommittee's own findings.
Lack of follow-up by military investigators and the inability of Bureau agents and U.S. Attorneys to understand the particular and complex nature of DoD programs were given as reasons that cases were not pursued. It appeared that. unscrupulous vendors were aware that even if military officials knew about fraudulent practices, the government's "bureaucratic machinery" would be unable to succes-" fully prosecute. During the course of the meat investigation, subcommittee investigators repeatedly found this pattern in other areas of the country.
The DoD has more investigators and auditors than all the other Federal program agencies combined. The potential for fraud and other criminal activity exists in nearly every aspect of DoD business as
well as food. It is imperative that any institutional barriers that exist. between the DoD and the Department of Justice or between investigative, audit, and procurement components of the military services be broken down and properly coordinated. The subcommittee believes that the special "meat investigation" presents a case experience upon which top officials within DoD and DoJ can base solutions. Finding No. 5
MXilitary inspectors were instrumental in identifying and developing information concerning criminal activity and mismanagement associated with DoD's procurement of beef. The replacement of military inspectors with USDA inspectors for in-plant quality assurance functions will require new relationships between USDA inspectors, DoD procurement and audit agents, and the Justice Department. Recommendation (s)
The Secretary of Defense, Secretary of Agricuture and the Attorney General should review the means by which inter-agency coordination and accountability is to be obtained when USDA personnel become sources of information relating to allegations of wrongdoing or mismanagement associated with DoD food procurements. Appropriate procedures should be established. USDA inspectors should clearly understand who to inform and who will take action if they become aware of wrongdoing on military contracts. Discussion
The use of USDA personnel to perform inspections for military contracts should not lead to cumbersome and nonresponsive inter-agency procedures. The new relationships to be developed must recognize and support individuals who do their jobs, not frustrate them.
SECRETARY OF AGRICULTURE
The Department of Agriculture's leadership to develop and make operational government-wide quality assurance, specification, and market information systems for food procurement represent new responsibcletaey of Agriculture has sponsibilities for the Department. The Secretary of Agriculture has demonstrated leadership in accepting these new responsibilities for food procurement reforms.
The Secretary of Agriculture should insure adequate priority and resources to the accomplishment of objectives established to develop and manage quality assurance, specification, and market information systems for the procurement of food by the Department and other Federal I agencies in evolving reorganizations of his Department.
The S-cretarr should recommend to the President any interagency reorganizaItion, transfer of functions, or additional resources he believes essential to the accomplishment of food procurement reforms.
The Secr tary, in conjunction with the Administrator of the Office of Federal Procurement Policy should report to the appropriate conmmittees of Congress any legislative changes needed to accomplish goverinW'nt-wide food procurement reforms.
A contributing cause to the collapse of the DoD p)rocurenent svytem for beef, and the resulting scandals, was inattention and neglect by top management within the DoD to repeated signs that something vn-i wrong. Quality assurance functions were not a high priori ty wit ()S ), the Army health Services Conmand, or the Defense L(,ogitics Aecy and its. component, the De fense Personnel Support C(enter.
Ttimony during the September hearings contained allegations that management problems existed with the USDA meat gr(ing service, wlich operates acceptance programs for the government's purchasing of meat. The subcommittee believes that the Secretary's assumpn)tion of new responsibility for food procurement reforms 1)resen t an opportunity to review the Department's capability to perform the new responsibilities and take any corrective actions needed.
ASSISTANT SECRETARY FOR MANPOWER, RESERVE AFFAIRS, AND
LOGISTICS, OFFICE OF THE SECRETARY OF DEFENSE
Finding No. 8
In the early stages of the investigation the subcommittee was unable to identify "where the buck stopped" within DoD. Those who were responsible for decisions were difficult to locate. The DoD procurement system was compared to a "Rube Goldberg" device where there is a lot of very complicated motions, but very little positive accomplishment.
The fragmentation of numerous DoD components responsible for procurement decisions, confused lines of authority and responsibility, and uncertainty over who was the accountable agent for system problems, compounded system inadequacies and permitted abuses.
The Office of the Secretary of Defense has overall policy and direction responsibility for the DoD food service program. The Assistant Secretary for Manpower, Reserve Affairs, and Logistics, is the responsible and accountable agent for the successful, effective, and efficient operation of the program. He is the accountable agent to insure that all recommendations made to improve the program are reviewed and( that assignments to implement performance objectives, and timetables are established and followed.
The Office of the Secretary of Defense should re-evaluate the allocation of resources to the food service and quality assurance program at the OSD level and should strengthen the Assistant Secretary for Manpower, Reserve Affairs, and Logistics management of the DoD subsistence program.
If target dates are to be met, if sustained attention and priority to implement recommendations throughout the system are to be maintained, and if effective interagency coordination is to be achieved with the Department of Agriculture's programs for government-wide quality assurance, food specification, and food market systems, the OSD central management role should be strengthened.
Both the Army and the DoD task force studies recommended that the OSD central management role be strengthened. The OSD decided not to increase staff resources to the food service function. Certain
"non-policy" responsibilities have been transferred to Defense Logis-tics Agency and further consideration was given to transferring the Food Planning Board to the Defense Logistics Agency.
While the Director of Supply Management Policy within OASD' for (MR&L) has assumed the chairmanship of the DoD Food PlanningBoard, and the Board must now review all its constituent committee decisions, these steps have not adequately strengthened the centralmanagement role. The military services are still in the majority and it will be difficult at best to implement changes to which the services. object.
Implementation of recommendations to improve DoD procurement of food has proceeded slowly. Numerous target dates for implementation have been missed, extended, or put off for further study. Despite Secretary Riley's indication during the September 1976 hearings that the results of a trial DoD-USDA meat procurement program, using commercial specifications, would be available some 6 months later, in April of 1977, final results are not anticipated until April of 1978. Efforts to adopt new procurement methods at DPSC to ensure cooperation and cut overhead costs have suffered similar delays.
ADIINISTRATOR OF THE OFFICE OF FEDERAL PROCUREMENT POLICY
Finding No. 9
Many problems discovered in the subcommittee's investigation of military beef procurement relate to government-wide food procurement practices, rigid and unnecessarily detailed product specifications that substantially deviate from those commercially used, a lack of effective competition for contract awards, and inadequate quality assurance practices.
The Office of Federal Procurement Policy initiated interagency studies recommended plans to improve government-wide as well as DoD food procurement practices. Implementation of these reforms should result in considerable savings in the government's annual procurement of $3.5 billion of food. Recommendation(s)
Consistent with the authority granted in Public Law 93-400, the. Administrator for Federal Procurement Policy should oversee progress made towards established performance objectives and timetables designed to develop and make operational government-wide quality assurance, specification, and market information systems.
The Administrator should consult with affected agency heads if failure to accomplish established objectives jeopardize these reforms to improve the government's procurement of food.
The Administrator should report to the appropriate committees of Congress if significant failure to accomplish established objectives jeopardize these reforms and if statutory barriers are identified. Discussion
Successful implementation of the food procurement reforms wiIl require unusual interagency coordination and cooperation. Transfers of functions and new relationships among agencies buying food and USDA will be established. The Administrator's statutory authority and location within the President's management arm, the Office of Management and Budget, places him in a position to oversee and facilitate their accomplishment.
U.S. SENATE, G OVERNMENT
COMMITTEE ON OPERATIONS,
SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES,
EFFICIENCY, AND OPEN GOVERNIMENT,
Washington, D.C., September 17, 1975.
Hon. JAMES R. SCHLESINGER,
Secretary of Defense,
The Pentagon, Washington, D.C.
DEAR MR. SECRETARY: As Chairman and Ranking Minority Member of tthe Subcommittee on Federal Spending Practices, our strong interest in Felderal procurement policies and practices leads us to bring a matter of concern directly to your attention.
The Subcommittee has been conducting an investigation of the Defense Supily Agency's (DSA) procurement of meat for troop issue. Tests performed Ly th1, military personnel at Subcommittee request in early July of this year rev(al,- 1 that beef products of two companies were in substantial nonconformance wNith contractual specifications. The initial test results raised serious questions co Incerning the efficiency of DSA's inspection procedures and procurement practices.
The Defense Supply Agency initiated several actions to determine the natuirn and extent of the problem. A limited criminal investigation coordinated bv the Command Security Office of DSA was started in mid-July and a formal nationwide audit of beef items in Defense Personnel Support Center (DPSC) subsistence points was completed by late August.
Inventories from six DPSC subsistence points and 19 vendors across the country were tested. A majority of sampled contracts, in terms of both total dollars and total poundage, were found to be in nonconformance with contractual specifications. Among the more serious violations found were indications of substitution of muscle cuts and meat grades.
These two abuses alone are serious and, if widespread, represent a serious loss of taxpayers' money. While these specific findings focus upon two vendors (G&Gr Packing Company and Blue Ribbon Frozen Foods, which are co-owned) the existance of these practices as well as other widespread nonconformances suggest that DPSC procurement procedures can be improved.
The subcommittee presently hopes to hold initial hearings in late October that will focus upon the audit team's findings and certain aspects of the DOI) precurement system for perishable foods.
We believe it is now imperative that a full understanding of the practices (,IIIployed by the above two firms and their relationship with DOD personnel and the DOD procurement system for beef be developed. We, therefore, respectfully requo-t that a coordinated DOD investigatory task force be con-tituted to perform an investigative survey to meet this goal. We further request that arrangements be inade to enable the task force to work as closely as possible with the Subcommittee in pursuing this matter. It is our firm belief that this case merits the full attention of the Department's investigative resources and that a thorough understanding of these problems holds the key to initiating long overdue corrective action.
We would greatly appreciate your prompt attention and! cooperation. For1 further information and coordination, please contact Mr. Lester A. Fettig, Sulcommittee Chief Counsel, telephone 224-0211.
With best personal regards,
LOWELL WEICKER, Jr.
Ranking M11inority member.
OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE, Washington, D.C., September 26, 1975.
(Adcmin ist rat ion)
Hon. LAWTON CHILES,
Chairman, Senate Subcommittee onh Federal Spending Practices, Efficiency, and Open
Gorernne nt, U. S. Senate, Washington, D.C.
DEAR SENATOR CHILES: The letter of September 17, 19757 jointly signed by you and Senator Lowell Weicker, Jr., requesting that a coordinated Dol) investigatory task force be constituted to perform an investigative survey of the practices employed by two vendors and their relationship with DoD personnel and the DoD) beef procuremnent system has been referred to me for reply. An identical response is being furnished directly to Senator Weicker.
As a result of your request, the Defense Investigative Service (DIS), a Defense agency under my staff supervision, has been directed to initiate an investigative survey of the several allegations of nonconformance with contractual specifications by the two vendors. The DIS has been authorized to constitute a DoD investigative task force augmented by personnel of the investigative agencies of the Military Departments. The DIS has been instructed to make suitable arrangements to enable the DoD task force to work closely with your Subcommittee, as well as the GAO, and to keep you informed of significant developments in this matter. Initially, the DIS task force will concentrate on those specific allegations of fraud involving the two vendors. Should the investigation of the allegations reveal systemic flaws in the procurement process or indications of -Widespread contractual nonconformance, the DIS has been authorized to expand their inquiry as necessary to develop a full understanding of the extent of the problem and to pursue all potential leads of noncompliance or criminality.
Concurrently, the Defense Supply Agency is being requested to establish a Dol) task group to evaluate the DoD procurement systems and policies, particularly in view of the findings of the Subcommittee and other investigative groups, and determine what changes to the system are indicated. The task group will be requested to keel) the Subcommittee apprised of its progress and findings.
I aippreciate your bringing this matter to the attention of Secretary Schlesinger and ass ure you that this inquiry will receive our earnest and prompt attention.
SinceelyD. 0. COOKE,
Deputy Assistant Secretary of Defense.
DEPARTMENT OF DEFENSE TASK GROUP ON SUBSISTENCE
Final Report, August 1976, Department of Defense, Office of the A-si-t'nt
Secretary of Defense-Installations an Logistics
1. On 1 October 1975, the Deputy Assistant Secretary of Defense (Supply, Maintenance and Services) requested that the Director, DSA, convene a joint DoD Task Group to evaluate the DoD subsistence procurement system and
policies. The objective of the Task Group was to assure that Dol) has an effective subsistence procurement system with appropriate checks and balances to prevent a recurrence of the problems surfaced by the Senate Subcommittee on Federal Spending Practices, Efficiency and Open Government and by subsequent D)oD actions.
2. Essentially, the Senate Subcommittee found indications that large quantities of nonconforming beef products were being delivered to and accepted by DoD. This was confirmed by inspecting, on a statistical sampling basis, approximately 1% million pounds of fabricated beef; overall, 61.2 percent of the product examined was nonconforming in varying degrees to the requirements of the specifications.
3. By DSA memorandum, dated 31 October 1975, the Military Services wei e requested to provide representation to the Task Group, which first convened on 17 November 1975. The Group consisted of 13 full-time members and 9 members assigned on an as-required basis. Three subcommittees were established-Procurement and Supply, Quality Assurance, and Specifications. Subcommittee members were assigned individual responsibility for collection and initial analysis of data and preparation of findings and tentative recommendations. These staff studies were reviewed by members of the applicable subcommittee, the subcommittee chairmen and by the Task Group Chairman. In the main, the final report of the Task Group reflects the material and information contained in the staff studies. Exceptions are Chapter 2, Management of the Food Service Program; Chapter 7, Alternate Supply Support Concept for Beef; and Appendix Q, A'Zignment of Quality Assurance for Perishable Subsistence to DCAS or USDA. These were prepared subsequent to the general fact-finding period of the Task Group. However, these items were either discussed with the subcommittee chairmen or developed by the Task Group Chairman.
MANAGEMENT OF THE FOOD SERVICE PROGRAM
4. DoD Directive 1338.10, dated 14 January 1972, establishes the objectives and policy of the DoD Food Service Program. The DASD (SM&S) is responsible for providing overall guidance and direction to the Program. To assist in accomplishing required duties, the DoD Food Planning Board was established. The Board has been delegated responsible for the food service program and developing nutritionally sound menu, and recipes. Staff surveillance of the pi ogram was formerly performed by a staff of seven professionals within OSD (I&L); these duties are now assigned to one individual. The personnel resources allocated to staff surveillance of the DoD Food Service Program at the OSD (I&L) level should be reevaluated for sufficiency.
5. The DoD Food Planning Board established three committees to perform its operational responsibilities: Armed Forces Recipe Service Committee, Armed Forces Menu Service Committee, and Armed Forces Product Evaluation Committee (AFPEC). The committees operate with considerable independence
especially AFPEC. The Board's most significant responsibilities have been assigned to AFPEC whose voting membership is restricted to representatives of the Military Services with none from DSA.
6. The AFPEC, as an organized committee of operational specialists, appears to have filled the need of providing day-to-day assistance in resolving subsistence matters. Decisions with major impact, however, should be made at a higher level.
SCOPE OF SUBSISTENCE PROCUREMENT
7. Subsistence expenditures by DoD for FY 1975 are estimated to be $2.5 billion. This includes purchases for both troop-issue and resale requirements. Of the total amount, approximately $955 million was purchased by the Defense Personnel Support Center (DPSC), a field activity of the Defense Supply Agency. DPSC purchases of meat and seafood during FY 1975 exceeded $377 million; $114 million of this was for fabricated beef.
PROCUREMENT AND SUPPLY
S. DSA is the integrated materiel manager for subsistence within DoD and is responsible for worldwide supply management of wholesale subsistence stocks. Operational performance of this function, is assigned to DPSC. This includes responsibility for supply operations, technical services, procurement and productions support.
9. The Task Group found remedial action was required to:
a. Simplify DSA's subsistence solicitations.
1). Encourage supplier interest in offering on DSA solicitations.
c. Develop complete and cumulative performance histories on suppliers as part of a computerized management information system.
d. Encourage the use of written rather than oral offers.
e. Implement a program of using multi-carlot IDTCs and individual buys to procure fabricated beef.
f. Assure that reports of nonconforming supplies are quickly and accurately recorded.
g. Assure that all deliveries extended formally or by forbearance are evaluated individually and that appropriate price adjustments are made.
h. Delegate to the commissary officer the authority to accept/reject nonconforming supplies.
i. Assure prompt payment of contractors' invoices.
j. Require that subsistence commodity experience and/or training be a prerequisite for appointment to intermediate and higher buying or contracting officer positions.
k. Review and revise, as appropriate, rotation lot control procedures to assure that subsistence items with excessive age are not being issued.
10. Specifications for military subsistence requirements are considered by some ,s I Wing either restrictive, inflexible and strict, or extremely tight and stringent. Not witbstanding these allegations, the Task Group, after its review and analysis, finds"
a. Specifications in general are a reasonable interpretation of the military requirement; product characteristics of some specifications differ from normal industry methods.
b. Standardization limits the scope of items that can be purchased even though the spcifi cation mn a v authorize different types, styles, classes, etc. This results in the specification 1)(eing accused of being restrictive when, in fact, any limitations are imposed by 1)o ) standardization policy.
c. Some supplier complaints are self-serving. If these were accommodated, th(v would give ,in unfair advantage to the complainant.
d. "tRestrictAive" differences between military s)ecifications and commercial 1)ractice are generally due to sound decisions which are necessary to mect military req uirements.
e. Communication channels between industry, AFPEC and the specification
paring activity need to be improved.
11. Further, the Task Group finds need for improvement as follows:
-i. )ol) should intensify its management of food specifications through its st indlardization assigned activity.
b. The Natick Research and )evelopment Command (NARAI)COM), the subsistence specification preparing activity, should have a fuller capability to .effectively measure the cost impact of alternative product, packaging and packing considerations in the development of specifications.
c. As of 31 March 1976, there were 63 approved and published specifications or amendments that had not been implemented for procurement purposes. Many were not implemented for valid reasons. However, the failure to do so Causes prol)lems and confusion for industry, procurement organizations and the inspection services. 1)SA should promptly implement specifications and amendments or obtain authority to delay or withhold implementation.
d. It is not cost effective to standardize, develop and maintain specifications for low-dollar value, personal preference type requirements. Considerable savings can 1)e realized by using commercial products for low-dollar items, such as sauces and condiments.
e. Products, similar to the military specification item, are described in the Institutional Meat Purchase Specification an(l in the National Association of Meat Purveyor's Meat Buyers Guide. )o) should reevaluate the military sp(cification item relative to these commercial specifications, especially for diced beef.
f. DSA (DPSC) currently is procuring grill steaks with a specification requirement for 25% rib eye, 25% loin strip, 25% sirloin butt and the remaining 25% '/0 any combination of the previous three. Because sirloin butt is the lowest price, 501/c butt steaks are generally delivered. The Task Group believes that it would be more equitable to the Government and industry if the steaks purchased were procured as separate line items.
SUBSISTENCE QUALITY ASSURANCE
12. The current DoD concept for quality assurance is that the contractor must be responsible for controlling product quality and for offering to the Government for acceptance only those supplies and services that conform to contractual requirements. The Government is responsible for assuring that each contract specifies the appropriate contract quality requirements and assuring that the contractor complies with the contract requirements. Quality assurance functions for subsistence are performed by a variety of federal agencies, such as the Department of Agriculture, the Army Health Services Command, the Air Force Veterinarian Service, the National Marine Fisheries Service, etc.
13. The major difference between commercial and military specifications is in the amount of quality assurance provisions found in the military specification. The latter contains extensive procedural requirements for the examination and testing of the component and end items to determine that the quality characteristics are met. By comparison, industry depends primarily on satisfaction with the quality of the product delivered.
14. The Task Group has found that contractor inspection-government verification is a sound method for inspection of subsistence. This is contingent upon the development and use of valid statistical sampling techniques which further limit the risk to the Government.
15. After a review by the Task Group of quality assurance verification inspections, it was determined that:
a. The quality of destination vertification inspection ranges from barely satisfactory to outstanding, depending on whether the quality assurance representative (QAR) is technically qualified to inspect subsistence items.
b. Not all QARs who inspect subsistence items at destination are qualified to do so.
c. Nonconformances reported by QARs at destination are not always confirmed by the contracting officer in writing.
d. Some destination receiving points do not have facilities at which incoming subsistence items may be inspected.
e. Some origin inspection functions can be transferred to destination inspection.
16. Improvement is required in the following areas:
a. DPSC should discontinue the recategorization of product nonconformances.
b. The possibility of supply failure has been unjustifiably used as l)assis for accepting nonconforming supplies.
c. Test data on dairy products are not being consolidated and analyzed at program management level.
d. Need exists for improved communications with USDA relative to laboratory support of subsistence procurement.
e. Uniform supervision of procurement quality assurance activities and similar treatment of subsistence contractors will be more likely if veterinary officers are provided the same instruction at a common training facility.
f. When inspecting fabricated beef, QARs could perform their tasks better if they have been trained in commodity grading and in the ante and post mortem inspection of food animals.
g. Veterinarians should be assigned to DPSC's Augemented Defense Supply Offices.
h. Extra compensation should be authorized to enlisted personnel assigned to quality assurance duties in high cost metropolitan areas.
i. Quality audit procedures should be revised to include all possible technical requirements inspected at origin.
j. Product characteristics are not being audited at DSA storage facilities.
k. Product verification records should be mechanized so as to provide useful data to managers, specification writers, reviewers, etc.
1. Unsatisfactory material reports are not being submitted as required.
ALTERNATIVE SUPPLY SUPPORT CONCEPT FOR BEEF
17. The procurement of beef has historically caused the greatest number of problems in the purchase of subsistence. The following problems have been of concern during the last year:
a. Limited participation by industry in military procurements.
b. Limited QAR personnel resources.
d. Delivery and acceptance of nonconforming product.
e. Heavy volume of procurement workload at DPSC.
f. Acceptance of nonconforming product to avoid supply failure.
g. Ineffective use of vendor performance and quality data.
h. High product cost.
i. Alleged improper influence involving quality assurance personnel.
18. Rather than purchasing fabricated beef, which has already been processed, an alternative supply support concept for beef should be considered. The concept proposed is a regional meat-processing facility which initially would provide fresh beef products to military feeding activities located within the area served. These plants comparable to the commercial processing and distribution operations of food retailers and food service companies, should be contractor-owned, contractoroperated facilities. DSA would enter into multiyear contracts for processing government-furnished carcass beef or chilled meat cuts for processing and delivery to feeding installations within the areas served. The product would be processed under IMIPS, modified when necessary to meet military requirements.
SUMMARY OF RECOMMENDATIONS
CHAPTER 1. INTRODUCTION
CHAPTER 2. MANAGEMENT OF THE FOOD SERVICE PROGRAM
Recommend dation 2-1 (page 17)
ASD1) (I&L) should:
a. Reevaluate the allocation of resources to the food service program at the OSI) level with the objective of strengthening ASD (I&L)'s management of the subsistence r)rogram.
1. Require the DolD Food Planning Board to:
() Strengthen sul)ervision over its committees by approving or ratifying committee actions.
(2) Assure voting rights to all members of the Food Planning Board with representation on the Board's committees.
CHAPTER 3. SCOPE OF SUBSISTENCE PROCUREMENT
C1APTI:R 4. PROCUREMENT AND SUPPLY
Rec-omiiendation /1-1 (page 27)
I)SA (I)P1) should"
a. Revi(,w the policies an 1)roce(lures governing the procurement of subsistence by I)PSC to) (onsoi( hdte gui(lance into a simplified, ready reference applicable to IIQ I) PSC and tield activities.
b. Review contract clauses, articles, provisions, etc., to eliminate those which are not essential and to assure that the text of those remaining cIa>es facilitates uniform interpretation.
Recommendation 4-2 (page 29)
I)SA, in coordination with other participants in the Subsistence Procurement Program, should continue and intensify efforts to reduce and simplify the d(ocuments required by both subsistence contractors and product inspectors.
Recommendation 4-3 (page 33)
DSA (DPSC) should:
a. Monitor award, performance and product data to identify abnormalities which might adversely affect the support process.
b. Establish the increase in sources of supply as a management objective.
c. Exchange source information and award data with other federal agencies purchasing subsistence.
Recommendation 4-4 (page 35)
DSA (DPSC) should:
a. Develop a system to provide the contracting officer with detailed information of past and current contract performance to support a decision of responsibility or nonresponsibility of a prospective contractor or require a pre-award survey.
b. Assure that DPSC Directorate of Subsistence contract administration capabilities are adequate to support its procurement operations.
c. Require a survey of producers whenever a revised specification introduces extensive changes in production techniques. Recommendation 4-5 (page 36)
DoD should direct the development of a computerized subsistence management information system capable of responding to the overall subsistence data needs of DSA and the Military Services.
Recommendation 4-6 (page 37)
The Department of Navy should assure that the Navy Publications and Forms Center (NPFC) supports subsistence procurements in a timely and responsive manner.
Recommendation 4-7 (page 37)
DSA and NPFC should coordinate the stockage of subsistence specifications to preclude distribution of obsolete specifications and to prevent premature availability of specifications that will not be effective for a long period of time. Recommendation 4-8 (page 38)
DSA (DPSC) should to the maximum extent possible, both within the Headquarters and field offices, require written offers to include TWX/TELEX messages in the procurement of subsistence.
Recommendation 4-9 (page 40)
DSA should assure that distribution of contractual documents is accomplished as close to commercial practice as is feasible. Recommendation 4-10 (page 42)
DSA (DPSC) should adopt indefinite delivery type contracts with substantial specified minimum carlot quantities and limiting maximum quantities as the primary contractual method for the procurement of troop-issue beef items. Recommendation 4-11 (page 45)
DSA (DPSC) should adopt those procurement methods used by the Veterans Administration which can be advantageously applied to military subsistence procurement.
Recommendation 4-12 (page 47)
DSA (DPSC) should use an average of prices reported by competitive reporting services as the basis for economic price adjustments contained in IDTCs for red meat.
Recommendation 4-13 (page 48)
DSA should assure that the report of nonconforming supplies (DPSC Form 2662) is promptly prepared, routed and processed after the product discrepancy is reported.
Recommendation 4-14 (page 48)
DSA should authorize the government quality assurance representative t6e authority to reject nonconforming supplies. Recommendation 4-15 (page 49)
DSA should assure that price reductions in the acceptance of nonconforming supplies adequately compensate the Government. Recommendation 4-16 (page 49)
DSA should assure that all deliveries extended formally or by forbearance are evaluated individually and that price adjustments are made to preclude unjust enrichment to the contractor. Recommendation 4-17 (page 50)
DSA (DPSC) should delegate to resale activities the authority to accept or reject nonconforming supplies received under DPSC contracts. Recommendation 4-18 (page 50)
DSA (DPSC) should assure that qualified technicians assist contracting officers in arriving at the amount of price adjustment that the Government should obtain from the contractor for accepting nonconforming supplies. Recommendation 4-19 (page 52)
DSA should assure that the contract administration of subsistence contracts retained by the contracting officer is performed in a timely, effective and efficient manner.
Recommendation 4-20 (page 53)
DSA (DPSC) should:
a. Promptly pay, within the customary time-frames used in the trade, invoices for subsistence delivered to and accepted by the Government.
1). Validate the necessity for evidence of delivery required from the contractor and receiving activity as a prerequisite to payment. Recommendation 4-21 (page 58)
DSA (DPSC) should increase the emphasis on a comprehensive, ongoing program to expand and deepen the competitive base of individual subsistence items by contractor visits, trade association contacts and trade media publicity. Recommendation 4-22 (page 59)
DSA (DPSC) should organize and review the data relating to checks and balances to assure that the check or balance is required, operative and effective. Recommendation 4-23 (page 60)
a. Revise the local purchase instructions to reflect changes in organization and mission.
b. Periodically review the rationale for centralized procurement or management of each item used by a CON US activity to assure that it is most economically procured from a total economic cost viewpoint.
c. Publish to the Military Services the criteria under which items may be purchased locally.
Recommendation 4-24 (page 63)
I)SA (I)PSC), in coordination with SBA, should:
a. Intensify efforts to anticipate production prol)lems encountered by Section 8(a) contractors.
1). Provide maximum assistance to Section 8(a) contractors in resolving quickly any pro) lems which might endanger contract performance.
c. Initiate appropriate action to resolve problems to shorten the time required for all 8(a) contractors to l)ecome competitive. Recommendation 4-25 (page 64)
a. Require that sul sistence conmmo(lity experience and/or training be a prero(q uisitfe for selection to intermedIiate grade and higher buying or contracting, officer positions.
). Provi(le the( necessary- resource- and emphasis to selectively provi c nece- ry subsistence common ityv training for procurement personnel. Recommendation 4-26 (page 70)
DSA (I)PSC) should review/revise, as approl)priate, rotation lot control pro)cedures to assure that subsistence items with excessive age ar not being issuiei. Recommendation 4-27 (page 70)
The Military Services should review storage procediires at installation lvel to assure proper rotation of subsistence items after receipt from the supply source. Recommendation 4-28 (page 73)
DSA (1)PSC) should improve distril)bution control out of CONUS to include effective item management, to assure that the number of seavan mnovements to Europe are consistent with the ability of the receiving facility to unloa(ld. Recommendation 4-29 (page 73)
DSA (DPSC) should:
a. Provide increasedl emphasis to the source-loading program by publi-hin1e appropriate policy guidance concerning objectives, procedures and other pertinent details.
b. Take the necessary measures to increase vendor and receiving authority participation in the source-loading program. Recommendation 4-30 (page 78)
DSA (DPSC) should:
a. Develop the requisite advance procurement plans, based on historical an Il other related data, that will provide DICOMSS with the maximum effective support and the elimination of accumulated residual supplies.
b. Develop a management information system to provide continuous anl fuill visibility of van movements from source to destination.
c. Establish a procedure that will selectively group resale commissaries for the purpose of requisition processing and shipping to arrive at destinations routinely within preplanned calendar time frames to maximize commissary support.
CHAPTER 5. SUBSISTENCE SPECIFICATIONS
Recommendation 5-1 (page 95)
DoD should assure that the organization responsible for standardization (DPSC) and determination of requirements (AFPEC) and the activity responsible for development of specifications (NARADCOM) improve communications with the commercial sector through a more active solicitation of industry's views and timely response to the comments received. Recommendation 5-2 (page 98)
DoD should assure more expeditious specification support to correct product deficiencies.
Recommendation 5-3 (page 98)
The Department of the Army (NARADCOM) should:
a. Augment the quality assurance capability at NARAD)COM to provide expertise in red meat, dairy, poultry, waterfoods and plant products.
b. Assign responsibility for preparation of quality assurance provisions of specifications to the Food Engineering Laboratory of NARA)COM. Recommendation 5-4 (page 99)
The Department of the Army (NARADCOM) should elevate unresolved comments on subsistence specifications through standardization channels if nout resolved within a reasonable time.
Recommendation 5-5 (page 100)
The Department of the Army (NARADCOM) should require that all new an revised specifications and amendments to specifications he reviewed by ) co" modity experts in NARADCOM's Food Engineering Lab oratory prior to pulliction.
Recommendation 5-6 (page 100)
The Department of the Army should provide NARAI)COM (Food Engineei-in Laboratory) with a cost analysis capability which is vital to tae poearation 'f federal/military specifications that are technically and economically feasit)le.
Recommendation 5-7 (page 101)
DSA (DPSQ should promptly implement specifications and amendments or obtain authority to delay or withhold implementation. Recommendation 5-8 (page 102)
DSA (DPSQ should competitively negotiate production test contracts with suppliers best qualified and most representative of the industry to perform the test.
Recommendation 5-9 (page 105)
The Department of the Army should:
a. Reevaluate the temperature ranges in the military specification for beef roasts and steaks to assure that they are realistic, necessary and can be uniformly applied.
b. Assure that the temperature range of beef processed under military specifications is not exceeded after slaughter.
Recommendation 5-10 (page 107)
DoD should evaluate the Institutional Meat Purchase Specifications and the National Association of Meat Purveyors Specifications for diced beef and beef for stewing to determine if these products will meet military requirements.
Recommendation 5-11 (page 108)
DoD should authorize grill steaks procured under military specification MILB-0043813A (GL) to be procured, stocked and issued as separate line items of supply.
CHAPTER 6. SUBSISTENCE QUALITY ASSURANCE
Recommendation 6-1 (page 113)
DSA (DPSQ should fully implement MIL-I-45208A in solicitations and contracts for complex subsistence products when technical requirements are such as to require control of quality by in-process as well as end item inspection. Recommendation 6-2 (page 113)
DSA (DPSQ should assign the appropriate contract quality requirements for each subsistence contract in accordance with ASPR 14-101(a) through (e) and assure that source verification inspection applies to criteria specified in ASPR 14-305.2.
Recommendation 6-3 (page 116)
The Department of the Army (NARADCOM) should:
a. Establish inspection levels as limited as S-2 or S-1 for products posing little or no history or potential for quality assurance problems or for tables of examination requiring destructive sampling of expensive items.
b. Obtain statistical expertise for the development of Section 4 of subsistence inspections with emphasis toward reduction of consumer (Government) risk.
c. Amend specifications for MSIVI items to incorporate the concept of limiting quality protection with specific limiting quality and associated risk no worse than 2 1,, times the AQL and 10 percent respectively. Recommendation 6-4 (page 120)
DSA (DPSQ should prepare, maintain and periodically review for adequacy a listing by federal supply class of the agencies responsible for quality assurance on military subsistence contracts.
Recommendation 6-5 (page 125)
DSA (DPSQ should:
a. Assure that adequate inspection facilities are available at CONUS DSA supply point,,, and depots to provide support for inspection which can be performed at destination.
b. Transfer as much government inspection as practicable from origin to destination.
c. Assure that DSA employees responsible for destination inspection are fully qualified.
d. Assure that the procuring contracting officer advises the destination quality assurance representative of action taken on any nonconforming deliveries.
Recommendation 6-6 (page 125)
The Military Services should:
a. Assure that adequate facilities are available to inspect subsistance supplies at destination points.
b. Assure that Military Service QARs r-eSponsWi for' iWsPeCtinlgsuite items at destination are fully qualified. Recommendation 6-7 (page 125)
The Department of the Army (NARADCOM) should modify specifications as necessary to provide for destination inspection of those product characteristics which can be transferred from origin to destination. Recommendation 6-8 (page 127)
DSA (DPSC) should:
a. Use the defect classification in MXIL STD 105D instead of those in DPSCM 4155.41.
b. Discontinue the recategorization of product nonconformances. Recommendation 6-9 (page 128)
DSA (DPSC) should discontinue the acceptance of nonconforming subsistence products to avoid a supply failure unless the damaging effect of the supply failure is fully substantiated and documented. Recommendation 6-10 (page 131)
DSA (DPSC) should:
a. Analyze the contract adjustments resulting from butterfat tests to determine the extent to which this contractual requirement is cost effective.
b. Initiate a request for NARADCOM to research and develop standards other than butterfat for measuring quality of dairy products. Recommendation 6-11 (page 132)
The Department of the Army (HSC) should assure that DSA M~anual 8200.1, Appendix A, is fully and uniformly implemented by the Military Veterinary Services.
Recommendation 6-12 (page 132)
DSA (DPSC) should review the testing of dairy products required by DSAM 8200.1, Appendix A, to reduce the frequency to the minimum necessary to assure contractual compliance.
Recommendation 6-13 (page 132)
The Department of the Army (HSC) should:
a. Intensify the management of the laboratory testing of dairy products.
b. Accumulate data from laboratory tests of dairy products and prepare a periodic summary of the data for use by specification, procurement and quality assurance management personnel. Recommendation 6-14 (page 134)
DoD should reevaluate the risk involved by not requiring laboratory analysis of fish.
Recommendation 6-15 (page 135)
The Department of the Army (NARADCOM) and DSA (DPSC) should improve communications with USDA laboratories providing support for military subsistence procurement.
Recommendation 6-16 (page 136)
Department of the Army (HSC), in coordination with the Department of the Air Force (AF Veterinary Service) and the Defense Supply Agency (DPSC) should develop and publish administrative, procedural and technical guidance to govern inspections conducted by quality assurance personnel of the Military Veterinary Services.
Recommendation 6-17 (page 136)
Defense Supply Agency (DPSC) should rescind instructions contained in DPSC Manual 4155.6 which apply to military service veterinary quality assurance personnel on publication of the joint regulation contained in Recommendation 6-16.
Recommendation 6-18 (page 137)
DoD should designate the Department of the Army as the executive agent and require the consolidation of training of Army and Air Force veterinary officers in subsistence quality assurance. Recommendation 6-19 (page 139)
a. Require the Military Veterinary Services to expand and intensity continuing short-term service training courses and unit level training.
b. Structure the short-term courses and unit training according to specific commodity groups.
c. Fully utilize the Academy of Health Sciences Veterinary Technical Liaison Team in the establishment and improvement of unit level training. Recommendation 6-20 (page 140)
The Department of the Army should, in coordination with the UTSDA, establish an on-the-job training program in commodity grading and in the ante and postmortem inspection of food animals. Recommendation 6-21 (page 141)
a. Assure that military position descriptions for veterinary officers define minimum occupational experience.
b. Not accept the assignment of veterinary officers whose experience does not include the supervision of activities responsible for procurement quality assurance at processing plants which produce meat and meat food products under DPSC contracts.
Recommendation 6-22 (page 142)
DSA (DPSC) should assign veterinary corps officers to only those positions which are authorized for veterinary officers. Recommendation 6-23 (page 144)
DSA (DPSC) should establish positions for veterinary officers at the Augmented Defense Supply Offices.
Recommendation 6-24 (page 146)
DoD should authorize extra compensation for enlisted personnel assigned to quality assurance duties in high cost metropolitan areas commensurate with the cost of living.
Recommendation 6-20' (page 146)
Department of the Army should assign medical laboratory specialists performing subsistence testing at Health Service Command Laboratories to three-year tours of duty.
Recommendation 6-926 (page 148)
DoD should direct expenditious integration of data from the numerous existing subsistence quality assurance reports into a single mechanized DoD data program. Recommendation 6-27 (page 150)
DoD should develop a consumer-oriented food service feedback program incorporating the superior features of existing Army and Air Force programs. Recommendation 6-28 (page 150)
The Air Force should:
a. Consider expansion of the Consumer Level Quality Audit Program (COLEQUJAP) to measure consumer acceptance of subsistence supplies at various levels of quality or product characteristics.
b. Develop improved techniques for collecting, transmitting and publishing COLEQUAP dlata.
c. Provide COLEQUAP data to DSA (DPSC) and Department of the Army (HSC).
Recomimendationt 6-29 (page 152)
DSA (D)PSC) should:
a. Revise the agreement with 118C concerning the DSA quality audit of perishable subsistence t o provide for quality audits to be performed either by DPSC
personnel or HSC personnel under the direction of DPSC similar to the procedure for nonperishable items.
b. Require that quality audit reports be forwarded to origin inspectors indicating acceptable as well as nonconforming products.
c. Mechanize quality audit data as part of the management information system (see Recommendation 4-5). Recommendation 6-30 (page 154)
The Department of the Army and DSA should:
a. Develop a system whereby samples for quality audit can be drawn and subjected to audit inspection soon after acceptance by the Government.
b. Change quality audit sampling procedures so that audits will be performed at supply points to include product destined for overseas shipment which is handled through a supply point. Recommendation 6-31 (page 154)
DSA (DPSC) should:
a. Revise quality audit instructions to include all possible technical requirements inspected at origin.
b. Assure that quality audits take place in sufficient time for warranty actions to be taken when necessary. Recommendation 6-32 (page 155)
a. Include more product characteristics in quality audits on non-perishables.
b. Assure that depot quality auditors are qualified to inspect product for USDA standards.
c. Forward to origin inspection activities copies of quality audit reports indicating acceptable and nonconforming products.
d. Mechanize quality audit data and data from origin inspection. Recommendation 6-33 (page 158)
a. Formalize the agreement with the Department of the Army to provide for participation by the Health Services Command and Natick Research and Development Command in quality system management visits.
b. Reevaluate the quality systems management program with an objective of providing for an evaluation of government in-plant verification inspection during the quality systems management visits.
Recommendation 6-34 (page 161)
DoD should require that the management information system resulting from Recommendation 4-5 include relevant data from the Product Verification Record, DD Form 1714.
Recommendation 6-35 (page 162)
DSA (DPSC) should:
a. Assure that reports of nonconforming supplies are complete and prepared on a current basis, and that all information elements are entered with the ADP data bank.
b. Issue timely ADP reports on nonconforming suppliers on a regular basis.
c. Consider including both conforming and nonconforming product data in the ADP data bank.
Recommendation 6-36 (page 165)
The military departments should institute an educational program to thoroughly acquaint commands with the purpose and need for unsatisfactory material reports and encourage their submission. Recommendation 6-37 (page 165)
DSA (DPSC) should:
a. Provide and publicize a hot-line number to telephonically receive product complaints (UMRs) from consumers.
b. Respond promptly to consumer complaints with replies which are responsive and sensitive to the problem presented.
c. Document the unsatisfactory material report file to show when the action planned has been completed.
Recommendation 6-38 (page 165)
DSA (DPSC) should revise the DPSC Subsistence Inspection Manual DPSCM 4155.6, in coordination with the Military Veterinary Services, to require the QAR to submit simultaneously to HQ DSA and DPSC any report of suspected fraud or criminal conduct.
Recommendation 6-39 (page 166)
DSA should revise DSAR 4155.8 to require that:
a. When warranted, investigations proceed beyond the scope of information already on file in cases involving adverse quality and reliability allegations.
b. When fraud is suspected, the matter should be reported to HQ DSA under DSAR 5705.1, Reporting of Security/Criminal Incidents, and DSAR 5705.2, Criminal Investigation Support to DSA. Recommendation 6-40 (page 167)
DSA (DPSC) should test and evaluate for regular use the pre-award verification inspection of fabricated beef items.
CHAPTER 7. ALTERNATE SUPPLY SUPPORT CONCEPT FOR BEEF
Recommendation 7-1 (page 182)
DOD should have a study made by industry consultants in coordination with the commercial sector and DOD personnel to evaluate fully the feasibility of direct support of CON US troop-issue and resale requirements for fresh, chilled product through regional, centralized, meat-processing plants.
DEPARTMENT OF THE ARMY-FINAL ASSESSMENT OF THE AD HOC COMMITTEE ON SUBSISTENCE
The Army Ad Hoc Committee on Subsistence has completed its review of the role played by the US Army in the procurement and inspection of subsistence for Department of Defense agencies. The requirement for conducting such a review stemmed from the iregulaiities discovered in the procurement and inspection of "red meat" in the New England area. Although it may appear to the reader that the report implies a uniqueness to the irregularities in the Boston/New England area to the exclusion of other areas, this was not the Committee's intent. Because of the New England area disclosures, it appeared appropriate to emphasize discussions and findings from this area in the final report, while at the same time recognizing that irregularities could be occurring in others since the procurement and inspection system is applicable CONUS-wide. Therefore, the Committee recommendation of actions apply to the basic system which affects subsistence procurement and inspection CONUS-wide, of not only "red meat" but of other items such as "water food," "poultry" and other perishables.
Also, the Committee has been advised that a number of measures taken to tighten up the system have not yet produced the intended results even in the Boston/New England area and other areas. The recommendations will not pieelude the irregularities from occurring again. Corrective actions and recommendations are meaningless unless they produce results and are supported by command backing and follow-up by all channels-command, technical and inspection. Therefore, continuing emphasis on improving and maintaining an ethical, efficient and cost-effective system must be stressed at all levels responsible for procurement and inspection of subsistence. There can be no let down nor can a "business as usual" syndrome continue.
The Committee did not attempt in its review to fix individual responsibility for the irregularities which occurred in the Boston/New England or other areas. It was felt that this was the responsibility of proper investigative agencies of the Defense Department and the Department of Justice. However, the Committee feels strongly, now that system irregularities have been detected and recommendations made to correct these irregularities, that continuation of the same problems must be considered as dereliction of command responsibility. Appropriate command action from the highest levels in the Army must be taken.
Finally, in the accompanying Executive Summary and Position Papers, the Committee identified some of the causative factors which it believed led to the irregularities surfaced in the procurement and inspection system for subsistence. However, the Committee would be less than candid to expect that the identified causative factors and recommendations for correction and improvement would solve all the problems. There will be a continuing requirement to program checks and inspections by all levels in the command, technical and inspection chain to insure that the system is working. Undoubtedly, there will be other instances reported of attempted fraud or subversion of the system. There must be a continuing scheme to educate, train, retrain and re-educate personnel who work the procurement and inspection system for the Defense Department's subsistence program.
PAUL D. PHILLIPS,
JACK C. FUSON
Lieutenant General, GS, Co-Chairman.
EXECUTIVE SUMMARY OF THE AD HOC COMMITTEE ON SUBSISTENCE
The Subcommittee on Federal Spending Practices, Efficiency and Open Government, Committee on Government Operations, U.S. Senate, chaired by Senator Lawton Chiles, conducted hearings on 10, 12 and 13 May 1976, on DOD Meat Procurement Practices. As a result of the hearings, the Secretary of the Army directed the establishment of a General Officer level Ad Hoc Committee to: review Army involvement, comprehensively assess all aspects of the DOD subsistence procurement system, define the problems involved, determine their causes and the changes necessary to improve the effectiveness of the systems, initiate actions to correct identified problems, and establish necessary controls to prevent recurrence of such problems.
The committee assessed the organization, roles, and missions of DOD elements involved in subsistence procurement; personnel management; procurement practices and procedures; the need for specifications; quality assurance operations to include the role and training of Army Veterinary Service personnel in food procurement; and system audits. These areas were analyzed through the development of questions derived from a review of transcripts of the hearings, draft findings of the DOD Study Group on Subsistence Procurement Practices, GAO Report intitled "Procurement of Beef by the Department of Defense," dated 25 May 1976, a briefing by the Defense Investigative Service, and a report on Project Seven Seas. Criminal involvement is being determined by the Department of Justice and various Defense investigative agencies. Results
The committee found that a variety of systemic weaknesses at all levels caused the Department of Defense subsistence procurement and inspection system to break down. These weaknesses developed and occured over a period of years through events, conditions and in some cases, programed changes that diluted the effectiveness of the system. The Health Services Command did not provide adequate supervision of the veterinary technicians performing origin in-plant quality assurance inspections. The Defense Supply Agency failed to recognize the need to supervise properly its sub stence procurement activity and its subsistence Quality Assurance Program and to perform detailed inspections of its subsistence acquisition functions. Our assessment has led to a conclusion that the Army does have an essential and proper role in the Department of Defense subsistence procurement/inspection functions as prescribed by Department of Defense Directive 6015.5, Joint Services Regulation AR40-657/NAVSUPINST 4355.4A/AFRI
163.2/MCOP10110.313, other regulations, and until an alternative inspection service fully responsive to Department of Defense requirements is available, no major changes in current Army organization and missions are required.
Improvements, however, are needed to strengthen the system. These have been identified and are included in this report. Many of these improvement actions have already been completed and are provided at inclosure 1. Others are either in the process of implementation (Inclosure 2), or are recommended for implementation as falling within the authority of the Secretary of the Army (Inclosure 3), or falling outside of the authority of the Secretary of the Army (Inclosure 4). We also include organizational charts (Inclosure 5) showing relationships of Army and others involved in food procurement and three information papers on Roles of the Health Services Command in Subsistence (Inclosure 6), Roles and Missions of DOD in Procurement (Inclosture 7) and Roles and Missions of Defense Supply Agency (Inclosure 8). A discussion of the more significant observations and required improvements follows.
Army.-Pursuant to apartmentt of lDefense Directive 6015.5, the Veterinary Services of the Army, ,s well as that of the Air Force, are responsible for performing, as agents for the Defense Supply Agency, Procurement Quality Assurance inspection of centrally procured food (Inclosure 5). In the continental United States, Veterinary Service J)'sonnel of the United States Army Health Services Command are responsible for performing this inspection service in designated areas for the )efense Supply Agency.
Over the years, significant problems which the Army did not recognize developed in the sul)Sistene procurement in-spection system. As a result, a workable
system, through lack of sufficient and )w ulr ,. iion Ii ul Ft~e rVelowcI a number of flaws. In some instances, the t alitional mco el l, staff ad technical inspection processes broke down. EffTective( cno lItion 1 i)etween t he inspection and procurement elements was not maintaid1. The, an una:ceptale situation developed because of a combination of cirmnt:mces which included limited resources, supervisory failures, and omi sioi of proper coornination, all of which could and should have been detOte(d by an effective sv-tern of commanIId and technical audits.
It is, therefore, the view of this connittee that the healthh Services Command, which is responsible for providing su)sistence procurement inspection support to the Defense Supply Agency, should strengthen its capa)ility to perform its assigned mission by promptly taking the following actions:
Establishing a Food Quality Assurance Element in the Directorate of Veterinary Services, Headquarters, Health Services Command to manage the in-plant origin procurement inspection program. Action has been initiated to obtain the necessary manpower spaces required for stalling the Directorate of Veterinary Services (Inclosure 6).
Establish two additional military officer spaces in the Food Quality Assurance Element to make unannounced inspections to vendors' plants, to strenghen supervision, and to expedite solution to the problems identified (Inclosure 6).
Another organizational subject which was discussed(l during the Congressional hearings concerned the requirement for a Veterinary Corps or Veterinary Service in the US Army. The implication of these comments was that the Veterinary Service should be abolished. The Committee recognized that these comments were made in the context of the Veterinary Service getting out of the nmeat inspection business but expansion of this context was made to the degree of abolishing the Veterinary Service. Therefore, we felt that the question of elimination or retention of this organization should be addreced in our report. We reviewed the overall mission of the Veterinary Service, the many past studies-fourteen studies have been conducted since 1971 by such agencies as the Army Audit Agency and the Comptroller of the Army-all of which went into some detail and concluded that a requirement exists for a Veterinary Service to assist the Army to accomplish its mission. As a matter of interest, there are about 214 Veterinary Corps officers and enlisted food specialist technicians engaged in full time in-plant quality assurance inspections out of a total of over 1400. We also looked at the requirement for Veterinary Corps personnel both from rotation base support and total force analysis in support of the Case 4/1 scenario. In both instances, there is a requirement for military personnel in a Veterinary service to support the Army in peacetime and wartime. From the findings, the committee concluced that there is a continuing requirement in the Army and Department of Defense for a Veterinary Service.
Defense Supply Agency
The Defense Supply Agency is responsible for wholesale procurement and supply of food for the Department of Defense. This Agency, which depends on the Veterinary Services of the US Army (Health Services Command) and US Air Force and the services of other federal agencies for in-plant inspection support of its subsistence procurement functions, also establishes technical operating procedures for the performance of the Quality Assurance Inspection Program. This arrangement is consistent with the Department of Defense policy as expressed in the Armed Services Procurement Regulations which specify that "maximum utilization shall be made of existing inspection services of other federal agencies to perform procurement quality assurance actions in processing plants." Although, these inspection responsibilities are shared, the Defense Supply Agency and the Defense Personnel Support Center have the ultimate responsibility for quality assurance which supports their subsistence procurement activities. It is in this context that the General Accounting Office review of the quality assurance inspection systems in being at three contractor's plants disclosed that the Defense Personnel Support Center had not adequately fulfilled its responsibility to oversee and improve the inspection system.
Several alternatives to the current Department of Defense quality assurance inspection system were considered. The assumption of the Department of Defense origin in-plant inspection functions by the U.S. Department of Agriculture, which is discussed in more detail elsewhere in this summary, could go far to preclude a recurrence of the undesirable publicity to the Army that resulted from the Boston situation. Before making such a move, OSD must be satisfied that
military subsistence requirements can be satisfied. The Department of Defense is currently exploring this matter with the U.S. Department of Agriculture. It is also possible for Defense Supply Agency to assume the quality assurance inspection functions in CONUS either by transferring the current military and civilian origin in-plant inspection resources to the Defense Supply Agency or by civilianization of the inspection force under the Defense Supply Agency. Since the latter would involve the building of a subsistence inspection organization and an inspection work force from the ground up, this alternative is not considered advisable. Although the economics of these alternatives have not been assessed, it is the view of this committee that it is in the best interest of the Department of Defense Food Program to expand its reliance on subsistence inspection systems of other federal agencies. In any event, this committee recommends that the Army be relieved of the in-plant inspection function as soon as DOD can make other acceptable arrangements.
Department of Defense
Because insufficient resources frequently play havoc with formerly workable systems, it would be inappropriate for this committee not to express its concern about the capability of the Office of the Secretary of Defense to continue to play a viable role in subsistence procurement and the food program of the military services. In recognition of the magnitude and importance of the subsistence program, the Department of Defense established, in 1966, a Directorate of Subsistence Management Policy in the Office of the Assistant Secretary of Defense (Installations and Logistics). This element was staffed with five professions to provide overall policy guidance and direction for subsistence.
Over the years, the staffing and importance of this subsistence element has eroded to one person, a staff assistant for subsistence. Despite concerns which the military services communicated to the Office of the Assistant Secretary of Defense, it was recently announced that the replacement for the incumbent officer would be primarily involved with supply system matters other than subsistence. This revelation is of deep concern to this committee inasmuch as the capability of the Office of the Secretary of Defense to provide direction and policy guidance to the Department of Defense subsistence program continues to deteriorate at a time when the overall program has serious deficiencies. Our intent is by no means to divert attention from the omissions of the Army in this matter but to emphasize that the subsistence function in the Office of the Assistant Secretary of Defense (I&L) is a vital element in this scenario and thus, should be strengthened.
in addition, the Office of the Secretary of Defense should be urged to consider the following actions:
Revise the duties and responsibilities of the DOD Food Planning Board (DOD Manual 1338.10M) to permit the Board to function as an executive policy group to formulate goals and objectives.
Expand the voting membership of the Armed Services Product Evaluation Committee to include the Defense Supply Agency so as to facilitate improved coordination between the military services and the procurement agency (Inclosure 7).*
Reassess the approved plan to further centralize subsistence procurement by closing the Alameda Defense Subsistence Region in view of reported deficiencies in staffing. administration and procurement at the Defense Personnel Support Center, and continued supply support problems (Inclosure 8). Personnel management
In examining the current subsistence procurement problems, it would be simple to dismiss, or at the very least minimize the situation, by "laying the blame" on happenstance-an isolated incident, or lack of individual integrity. Equally inappropriate would he to finesse( the situation by "pointing" the finger solely at personnel training. Our assessment, while recognizing the fundamental importance of the need for integrity, focused on examining the system to ascertain what placed such a severe demand-ultimately resulting in compromise--on individual integrity. We found deficiencies in supervisory leadership, a ilack of recognition of high cost-of-liv-ig resulting in personal hardships, job frustration fostered by a system that faiiled to recognize fully and to support individuals who were doing their jobs, andl less than opt imum personnel aissignmnent practices.
Accordingly, actions have been taken, are in process, or are planned which:
Will identify the most qualified personnel for .assignment to inspector and supervisory positions cons idering both integrity -inrd technical competence.
Fundamental to this effort will be the requirement for tbe completion of a Background Investigation (BI) prior to assignment. The BI will assist in deterininill". an individual's integrity, reliability, and financial responsibility. M
Adjust, within current Army authority, the grade structure associated with contractor subsistence quality assurance positions to provide for tbe assignmer.1t of more experienced, mature individuals.
Recognize high cost-of-living by: expanding Government-leased housing authority to married and bachelor personnel and establishing authority fur proficiency pay to assist in overcoming middle grade personnel shortages
Enhance the training system by formalizing training, specifically addressing commodity subsistence quality assurance for red meat and waterfoods.
Modify the inspection/rejection system so that inspector's efforts are fully recognized and supported, thereby rewarding competence and reinforcing integrity.
Revalidate enlistment and training entrance standards to optimize training output of highly motivated quality personnel.
Procurement practices and procedures
During the past year, Department of Defense subsistence procurement practices and procedures have been subjected to intense review and assessment by the Office of the Assistant Secretary of Defense, Defense Supply Agency, Defense Personnel Support Center, the Army's Health Services Command and Natick Research and Development Command. A variety of weaknesses has been identified Office of the Assistant Secretary of Defense, Defense Supply Agency, Defense Research and Development Command. A variety of weaknesses has been identified which contributed to current problems. Suppliers with chronic performance problems were not being identified and inspection reports of contract nonconformance with specifications were processed inconsistently; little or no compensation was being realized by the Government for value lost as a result of accepting nonconforming supplies. These conditions, compounded by other omissions, some of which are attributable to the Army and reported herein, were partially responsible for the subsistence procurement problems.
Once system weaknesses were identified, the Defense Supply Agency and the Defense Personnel Support Center instituted procedural changes in coordination with the Health Services Command. Some of the major changes are:
The rejection authority for noncompliance with specifications was delegated from contracting officer to origin inspecting officers. Previously, the inspector did not have authority to reject but would relay his inspection results to the contracting officer for a decision. (DA Inspector General inquiry in July 1976 indicates the results intended have not yet been achieved.)
Procedures for accepting nonconforming products were revised. Supplier requests for waiver, in the event of rejection, now must be submitted in writing. The authority to approve the waiver and price reduction, if appropriate, has been elevated to a supervisory level above the contracting officer at the Defense Personnel Support Center.
Oral offers were abandoned for fabricated beef and are now being considered for elimination for other subsistence items as well. This action will strengthen the competitive bidding process and provide a hard copy audit trail of Government contractor agreements.
Maintenance of contractor-vendor performance files has been revised to insure that poor vendor performance is documented, thereby facilitating prompt identification for possible administrative action.
During the Congressional hearings, concern was expressed over the small number of vendors doing business with the military. In exploring contributory factors, the Department of Defense Small Business set-aside policy and practices were assessed. This committee fully supports the stated objective of the Defense Department to support small business by setting aside a "fair proportion" of planned procurements. It should be noted, however, that in recent years the magnitude of the Defense Supply Agency set-aside program for fabricated beef has been as high as 75 percent. Only recently has this level been reduced to 50 percent. Interestingly, several meat commodities, such as beef primal cuts and corned beef (frozen, bulk style), continue to be procured only under a total setaside. This committee is concerned that it is possible that the set-aside practice of the Defense Supply Agency, together with the daily buying practices, may have prevented an important segment of the industry from competing. Accordingly, the following is recommended:
Decrease the frequency of buying which will increase the quantity to'be pro-cured under any one contract. This change may induce large business firms to. compete with more favorable prices to the Department of Defense.
Reassess the size and duration of set-asides to assure that all segments of the industry have both the opportunity and inducement to participate in Department, of Defense subsistence procurements.
Specifications are an interpretation of military requirements, although characteristics of some specifications may differ for legitimate reasons from normal. civilian industry products. Specifications normally provide for a range of grades types, styles, weight ranges, etc. When items are standardized and catalogued, the range is narrowed to identify the specific grade, type, style, weight range needed to meet military requirements. Military requirements differ from civilian products, to enable the product to withstand prolonged storage without significant deterioration and the rigors of overseas shipment and handling. The resultant specificationis often perceived as unduly restrictive. The major difference between military and federal specifications from others is that the former always contain quality assurance provisions to assure that the Government receives what it contracts for,. and that quality is uniform over all procurement of like items while the latter doesnot. We believe that the Department of Defense should continue to use military specifications where military exigencies dictate. However, all subsistence specifications should continue to be challenged periodically as to their continued validityand always on new items. Additional actions, either completed or recommended follow:
Health Services Command and The Surgeon General developed and theDefense Personnel Support Center published revised tolerances for foreign materials in military meat specifications to bring overly stringent requirements to a level comparable to U.S. Department of Agriculture and Food and Drug Administration requirements.
Communications between inspection, procurement, and specification personnel, are being improved by scheduled meetings, frequent communications, and command attention.
In 1975, at the request of the Office of Assistant Secretary of Defense (In-. stallations and Logistics), the Army developed a plan to improve the overall. subsistence specification support at Natick Research and Development Command. The plan, which identified a requirement for 12 additional spaces and $330,0900 per year, was approved by the Office of the Assistant Secretary of Defense (Installations and Logistics), and will be implemented in FY 7T.
Pr oposed new specifications developed by Natick Research and Development, Command are routinely coordinated with industry. There are indications that the mailing list maintained by Natick Research and Development Command for, the coordination is not as extensive as it could be. It is recommended that Natick Research and Development Command circulate their industry coordination mailing lists with b)oth the Defense Personnel Support Center and the Health Ser vices Command on a routine basis to assure that coordination of specificatiory& is accomplished in the most comprehensive manner possible.
In view of the continued accusations that the Department of Defense specifications are too restrictive, 1)01 should intensify its management of subsistence specifications by having military specifications reviewed immediately for content and continued need.
Quality assurance operations
Over a periodI of years, the origin inspection responsibilities for military subsistence procurement have been transferred to other Federal agencies with the, exception of certain foods of animal origin such as meat and xvaterfoods. Themilitary needs for certain items differ from the needs of the civilian community. These (Iiffe, rences are generated by long supply lines, extended storage under less, than ideal conditions, frequent changes in transportation modes, the need to eliminate transportation and storage of unnecessary fat, bone and other waste, find theW necessity to provide items which require no further processing at dining facilities or at fi!.ld kitchens.
Quality assurance provisions are included in military specifications to assure that the military item received is of the required quality. The Department of' I efenise, t herefore, has been forced to maintain an origin in-plant inspection capalbility for- these itemrs because no alternative inspection service has. been available..
The feasibility and appropriateness of transferring this insection to other federal agencies has been frequently examined. In the late 1950's, origin in-plant inspection of meat in a selected geographical area was transferred to the US Department of Agriculture. The US Department of Agriculture requ(ste d that Department of Defense reassume the inspection mission after several years because of numerous operational difficulties. Current D)epartment of l)e-fentees in military subsistence procurement has reopened the matter. An ongoing dialogue is underway between the Office of the Assistanct Secretary of l)efense (Installations and Logistics) and the US Department of Agriculture regarding the possibility of US Department of Agriculture performance of in-plant origin inspection of meats. The most recent discussions among Department of Defense personnel indicated a desire by the Office of the Assistant Secretary of Defense (Installations and Logistics) for a trial procurement of selected meat items, using the US I)epartment of Agriculture inspection system and US I)epartment of Agriculture type specification (Institutional Meat Purveyors Specifications). Until such time as an acceptable alternative to the current Department of Defense in-plant inspection service is available, there is a requirement for Department of Defense to maintain the current military inspection system. In evaluating the total transfer of in-plant inspections to the US Department of Agriculture, consi leration should be given to the need to maintain a CONUS training base and a rotation base to meet overseas procurement subsistence inspection requirements of Department of Defense elements, and to maintain a cadre of trained personnel to per mit mobilization expansion.
Our assessment of the quality assurance procurement and inspection opei ations area indicates the system can be made more effective and has led to the following findings:
DOD food procurement and inspection system is basically sound. Weaknesses exist in the areas of management, supervision and experience.
Other Federal inspection agencies, such as the United States Departrneit of Agriculture, recognize that 100 percent avoidance of incidents is impossible. However, we must take all possible corrective/preventive measures.
Inspection of certain perishable subsistence items at contractors' plants is essential. On the other band, it may be feasible to conduct destination (Army installation) inspection of other perishables and further evaluation in this regard should be made.
Inspections other than at contractor's plants, such as Defense Personnel Support Center Supply Points and military installations, serve as check and balance on origin inspections.
Adequate reporting systems exist, are being strengthened and, when properly used, permit in-plant inspectors, dining facility personnel and commissary patrons to report subsistence discrepancies.
Numerous actions are being taken to improve moi ale/welfare/efficiency/and supervision of Army inspection personnel in contractor plants.
Completed, in-progress and recommended actions will result in improved, mole nearly problem-free Army inspection participation in the Department of Defense food procurement system.
Army position, based on quality assurance needs for peacetime/wa-time requirements, is that military inspection of perishable foods in contractors' plants should be continued until an alternative inspection service fully responiive to Department of Defense requirements is available. Such a service is not curl ently available.
Within the Department of Defense procurement system there is a clearly demonstrated need for a viable "check and balance" system, a system that would assure actions taken to preclude deviations from the norm are quickly detected and promptly reported. Perhaps no other major area assessed by the Ad ttoc Committee offered so much potential for preventing or reporting illegal operations by either the vendor or the inspector as those offered by the various investigative elements of Department of Defense and the many reporting systems currently available within the military subsistence system. Turbulence in personnel operations, shortages in travel funds, the failure to completely coordinate inspection responsibilities between the procurer and the inspector, in addition to other factors, contributed to the origin and existence of the Boston situa tion. It is significant to note that the Defense Supply Agency Inspector General re ported that only about 10 percent of its scheduled visits to contractor plants had beed made during-F Y 75,
a situation attributed to cuts in travel funds. An overview of the actions taken to recognize, strengthen, and/or correct these areas follows:
Procedures to accomplish prompt, accurate preparation, and distribution of the various quality assurance reports have been implemented.
Provisions have been made for the US Army Criminal Investigation Command to perform crime prevention surveys, previously not made, of Defense Personnel Support Center's procurement activities that contract for meat and other items of subsistence.
To assure compliance with inEpection responsibilities of the Defense Supply Agency, the Defense Supply Agency will visit activities concerned with the procurement of subsistence, including, contractors' food preserving plants.
Increased technical and supervisory visits by the Health Services Command to Veterinary Service activities performing quality assurance inspections in contractor's plants are being made.
Health Services Command, Defense Personnel Support Center and Natick Research and Development Command are increasing their joint quality assurance management visits to contractor's plants.
Current efforts toward the development and implementation of a Department of Defense automated, consolidated, subsistence data feedback system are continuing.
Health Services Command is coordinating with Defense Supply Agency and Defense Personnel Support Center to increase the number of quality audit inspection sites from five to eight and to relocate them from Army installations to Defense Personnel Support Center refrigerated supply points.
The development and implementation of a strengthened Department of the Army subsistence data feedback system is continuing.
Sufficient travel funds to conduct chain-of-command/technical/Inspector General visits to contractor plants are being programmed.
Approve this assessment prepared by a special General Officer level Ad Hoc Committee.
Approve for implementation the actions recommended at enclosure 3.
Forward a copy of this assessment to the Secretary of Defense using the attached memorandum which recommends he approve and implement the recommend, tions at enclosure 4.
EXECUTIVE OFFICE OF THE PRF-SIDENT, OFFICE OF MANAGEMENTT AND BUDGET, Washington, D.C., July 29, 1977.
Hon. LAWTON CHILES,
DEAR SENATOR CHILES: The purpose of this letter is to advise you of two major programs I have initiated to improve the Government's procurement of food. These actions are described in the enclosed memorandums.
I have requested the Secretary of Agriculture to accept lead agency responsibility for implementing two plans developed by interagency groups that will produce major benefits to the taxpayer through lower cost of Government purchases of food and better management of food procurement operations.
One plan establishes a Government-wide system to provide useable and timely marketing information that will enable the Government's procurement officers to buy food at the best price.
The second plan calls for the establishment of a Government-wide system to provide quality assurance for all food procured with appropriated funds. Under this plan the Department of Agriculture would manage both the Federal specification system for food and the entire inspection and acceptance process for food that is commonly used by the various Federal agencies. This will be a fundamental reform that should go a long way toward preventing the kind of horror stories that resulted from the recent Army meat procurements.
With the Government's annual volume of food procurement estimated at $3.5 billion, the implementation of the plans I have outlined should produce significant savings, along with an improvement in management. For example, the elimination of redundant specifications for the various agencies should substantially reduce the number of procurement and inspection transactions.
I will keep you informed of our progress.
Sincerely, LESTER A. FETTIG,
RECOMMENDED EXECUTIVE BRANCH PLAN FOR A GoVERNMENT-WIDE FOOD
QUALITY ASSURANCE PROGRAM FOR FOOD PROCURED By FEDERAL AGENCIES
On July 30, 1976, the Administrator for Federal Procurement Policy requested the Secretary of Agriculture to assume full responsibility for developing an executive branch plan for a Government-wide quality assurance program for food procured by Federal agencies. Within the Department of Agriculture, the Secretary delegated this responsibility to the Administrator of the Agricultural Marketing Service. This request was stimulated by problems of Federal food quality assura-nee programs which have been highlighted in recent years by the Commission on Government Procurement, in various General Accounting Office reports, and in congressional hearings on food inspection activities. The central theme in the findings of these inquiries is that greater efficiency, accountability and economy are needed in these programs.
In order to carry out its quality assurance assignment, the Secretary of, Agriculture established the Interagency Food Quality Assurance Planning Committee. The Planning Committee consists of a chairman, selected from the Department of Agriculture, and one representative each from the Department of Commerce, Department of Defense, Department of Health, Education and Welfare, and Veterans Administration as well as a nonvoting, ex officio representative from the Office of Federal Procurement Policy.
Because of the magnitude and scope of this interagency effort, and in order to develop a manageable plan at this time, the Planning Committee limited its attention to food procured with appropriated funds. In addition, the Planning Committee established two working task groups to investigate the major quality assurance functions of specifications and product testing and acceptance. The task groups were chaired by Depaitment of Agriculture representatives and had memberships reflecting the same agencies as those represented on the Planning Committee. The findings and recommendations of the Specifications Task Group and the Product Testing and Acceptance Task Group guided the Planning Committee in formulating the elements of this executive branch plan.
FINDINGS OF THE INTERAGENCY FOOD QUALITY ASSURANCE PLANNING COMMITTEE
The items contained in this section represent the findings of the Planning Committee and its task groups and are meant to complement, not supplant, findings of other inquiries such as those of the Commission on Government Procurement and its Study Group 13A. As such, any problems listed herein are not designed to be an exhaustive identification of all food quality assurance problems.
The majority of appropriated fund Federal food procurement and distribution activities are conducted by the Department of Agriculture (USDA), Department of Defense (DOD) and Veterans Administration (VA). USDA is primarily concerned with food assistance programs such as the Child Nutrition Programs (National School Lunch Program, School Breakfast Program, etc.) and the Food Distribution Program which provides food assistance for such activities a $institutions for indigents, nonprofit summer camps for children, feeding the elderly, Indians, and other needy persons. In addition, USDA is involved with the purchase of products for direct distribution to developing countries under Public Law 480, Title II. DOD's activities focus on troop issue and special combat rations while those of VA are concerned with patients in VA hospitals.
There are seven principal Federal Acts affecting food quaility ass uance programs-the Agriculture Marketing Act of 1 94(i (ARNA), Eg ,,g Pr ducts I nspectio n Act (EPIA), Federal Meat Insp~ection Act (FM IIA), Poultry Product., ~I~~ii Act (PPIA), U.S. Grain Standards Act (US( SA), F~ederal Food, D~rug 1)nd Cosmetic Act (FFD&CA), and the Public Health Service Act (PI-ISA). One is 3 voluntary program (AMA), five are mandatory (EPIA, F M I A, PPIA, F'VID& CA) and the PHSA), and one has both mandatory and voluntaryN provisions( t7(8) In addition, the Armed Forces Act provides the authority for 1)0D to inspect and grade food products for DOl) procurement.
The following are mandatory regulatory activiteis designed to provide con-sumer protection:
In-plant meat and poultry products inspections, administer-ed by the Animal and Plant Health Inspection Service (APHIS) of the USDA, under the FNMIA and PPIA.
In-plant egg products inspection, administered by the Agricultural Marketing Service (AMS) of the USDA, under the EPLA.
Enforcement of requirements under the FFI)&CA for all food products, administered by the Food and Drug Administration (FDA) of the Department of Health, Education, and Welfare.
The majority of voluntary AMA quality assurance programs are performed by the Agricultural Marketing Service (AMS) of USDA. Seafood products are inspected and graded under the AMA by the National Marine Fisheries Service (NMFS) of the Department of Commerce. These services are provided to users on a fee basis and are utilized for both commercial purposes and Federal procurement.
While AMS and NMFS perform quality assurance activities under the AMA for most Federal food procuring agencies, DoD conducts quality assurance activities on meat and poultry foods, seafood, and combat rations produced under military and Federal specifications. DOD also inspects food of animal origin in plants where other Federal quality assurance personnel are not available (e.g., fluid milk plants). FDA's in-plant inspections for compliance with their Good Manufacturing Practices are complemented by sanitary requirements and inspections by AMS, NMFS and DOD.
Efforts to ident 'ify the man-years each Federal agency devotes to in-plant procurement acceptance services, and relate this to dollar value of food procured by the various agencies, were not completely successful. These efforts were complicated by a number of factors, including:
Inspection and grading services on various commodities under the AMA are performed at the request of industry. At the time of inspection or grading, it is not always possible for the contractor to tell if all or part of the lot will be sold to a Federal agency.
The data maintained on some of the AMA programs are not designed to separate those services for commercial trading from those for Federal procurement.
Recognizing these complicating factors, the Planning Committee estimates that in Fiscal Year 1975, approximately 860 man-years were used for Federal food procurement acceptance services in the continental United States with nearly two-thirds of these services performed by AMS and one-third by DOD. Overseas, DOD expended approximately 225 man-years performing in-plant quality assurance activities which include all wholesomeness inspection and grading functions.
Current quality assurance systems have a degree of standardization within commodity groups. Quality assurance actions differ among commodity groups based upon many factors, including: the degree of standardization of quality of incoming raw material, value of individual units, amount of hands-on processing versus machine processing, lack of ability to assure requirements after certain points in the process, and the expense of delays in production versus the risk the Government is willing to take.
Previous Federal food quality assurance investigations uncovered many areas in which overlap and duplication existed between Federal agencies' in-plant ,quality assurance activities. While progress has been made in recent years to correct this situation, a major area of concern, and potential for consolidation, is in the USDA and DOD meat procurement quality assurance activities. Another
-area is the presence of both NMFS and DOD personnel in some seafood plants.
Another aspect of Federal food quality assurance programs which has received much investigatory attention is that of food specifications. Study Group 13A of the Commission on Government Procurement found two problems which were
-clearly reflected by comments received from suppliers and processors:
Overly complex standards and specifications in relation to true needs.
Apparent lack of coordination among Federal agencies in the development and use of specifications.
The General Services Administration (GSA) has the responsibility by law for management of the Federal specification system. GSA has delegated preparatory responsibib~y for Federal specifications for subsistence items to the U.S. Army Natick Research and Development Command. Unfortunately, little, if any, oversight or direction is being provided in the specification area other than that imposed separately by each agency. As a result, there is little uniformity among agencies in the use V' Federal specifications when procuring subsistence items. DOD purchases mai-l of its subsistence items on the basis of military specifications. Most USDA purchases are made using USDA specifications. The Veterans Administration (VA), however, makes use of a combination of VA, military, USDA and Federal specifications.
There is no common understanding among the Federal agencies as to what exactly constitutes "use" of Federal specifications in procurement. Some agencies simply refer in offers to buy relevant parts of a Federal specification, other agencies include the complete Federal specification, whereas others make no reference to a Federal specification even though the agency specification is identical to a Federal specification.
Agencies also vary in the format of specifications. Some agencies include the inspection and acceptance provisions while others do not. In addition, different sampling plans are used by different agencies. These situations create confusion and inefficiency on the part of the food industry.
Some of the problems that agencies have with Federal specifications include too much time required to establish or amend a specification, too many documents involved for procuring an item, and failure of Federal specifications to meet the needs of the agencies. More than a year is usually required to get a new Federal specification into the system and it can take equally long to get an amendment adopted. Since no agency has final authority with regard to a Federal specification, and its applicability for procuring a common item, each agency develops a system to meet its own needs.
More than one agency is involved in research and development activity for common items, including evaluating and testing of the purchased products. There is no formalized system for coordinating the research and development activity of the agencies with regard to procurement needs.
Limited coordination often exists between the users and the specification activity within and between agencies. As a result, unique specification requirements are established which can necessitate deviations from normal commercial practices when these items are produced. Furthermore, industry input to the c-pecification activities of the agencies varies widely and generally is less than desired on the part of all agencies. There is no standard system for obtaining industry input during the developmental stages of a specification.
Little use is made of commercially available food products by Federal agencies for high-volume meat, poultry and fish items. This lack of use is not based totally on the acceptability of commercially available products, but is also caused by the lack of common industry developed standards which can be used for competitive procurements. On the other hand, USDA and NMFS grade standards and FDA and APHIS regulatory standards do provide bases to use in food procurement. The international standards being developed by the Codex Alimentarius Commission also offer a bamsis upon which Federal specifications can be established. Although little use of Codex standards exists, USDA and NMFS grade standards are widely used by all Government agencies.
Agencies go their own ways- with regard to use of specifications, resulting in agency oriented sjpecifieation systems instead of one, single Government-wide system. The preparing, printing, research and development, and the testing of the specifications are done by individual agencies with little or no interagency coordination. Waivers, deviations and procurement descriptions all, otter oppo rtunities for v,.ariance from the Federal specification sys tem.
Because of the difficulties of obtaining meaningfull cost data in the time-frame of the interagency quality assurance effort, cost effectiveness studies are not available regarding the elments of this executive branch plan. However. based on the experience andI judgment of the Planning Committee's and task groups' membership, the plan should provide a practical, efficient and economical Federal food quality assurance program.
ELEMENTS OF THE EXECUTIVE BRANCH PLAN
The executive branch plan for a Government-wide quality aurneprogrirm for food procured by Federal agencies with appropriatedI funds consists of the following three major elements:
1. The Secretary of Agriculture will have authority for quality ltssurannce policies andl procedures involving the procurement of food Iby Fedleral agemcies'.
2. The Secretary of Agriculture will have responsibility for Federal spe.cifications for food items.
3. After approval of the executive branch plan by the Adininisti ator for Federal Procurement Policy, the current Interag-ncy Food Quality Ass-urance Planning Committee will be immediately redesignatedl the I nt eragency Food Quality Assurance Implementing Committee, with 0addlitional authority provide( l as deemed necessary to implement the plan under the authority of the Secretary of Agriculture.
The need for element one was highlighted by the Commission on Government Procurement in order to achieve efficiency, accountability and economy in F~ederal food procurement. It is appropriate that the Secretary of Agriculture have this authority because USDA currently provides approximately two-thirds of the Federal food procurement acceptance services in the continental United States. In addition to providing this federal service, USDA also provides voluntai y quality assurance programs for use by private industry in commem cial food procurements. The quality assurance expertise of USDA encompasses all major food items including those related to meat, poultry, fruits and vegetables, dairy products, and grain and processed grain products. No realignments of the missions of FDA and NMFS are anticipated.
In order to provide more specific information concerning the authority contained in element one, the following recommendations are set forth:
A. Each Federal agency should make greater use of Memoranda of Understanding. This recommendation permits rapid implementation of potential economies and efficiencies and could complement existing programs. For example, a Memorandum of Understanding could be issued to provide for the interchange of information by DOD, FDA, NMFS and USDA on actual good manufacturing practices and conditions of domestic and foreign food plants.
B. The transfer of DOD's remaining in-plant quality assurance functions in the United States to USDA and NMFS is desirable. This transfer of responsibility should eliminate functional duplication between USDA/NMFS and DOD, and more fully utilize existing resources. The transfer to USDA and NMFS should be efficient, since both have on-going nonappropriated work which requires the same expertise as DOD in the various commodities. The potential utilization of the regulatory agencies in this transfer should be identified and used wherever possible.
Full realization of the goal cannot be short ranged but must proceed on a phased basis because the problems associated with an orderly, efficient and economical transfer of functions from DOD will require in-depth study and evaluation. In this regard, the following factors should be considered during implementation but prior to completion of the recommended transfer:
1. Evaluation on completion of the current DOD-USDA pilot study on procurement of certain meat items under the Institutional Meat Purchase Specifications with acceptance inspection by USDA. Favorable results from this study should be helpful in proceeding with full implementation of the recommended transfer as well as the overall executive branch plan. Unfavorable results will require further effort to evaluate why results were unfavorable and to determine appropriate corrective actions.
2. The conversion of military specifications to Federal specifications which meet DOD's requirements.
3. Evaluation of the cost-effectiveness of the transfer.
4. The time-frame in which USDA and NMFS can have the trained manpower available to absorb the added workload.
5. The need for personnel spaces within other Federal agencies to be used on a rotational on-the-job basis for developing and maintaining the quality assurance expertise of career-oriented military personnel. These personnel spaces will provide DOD with:
a. Experienced personnel for rotation overseas. (DOD performs all overseas in-plant inspection of foods for military purchase.)
b. The capability to develop a cadre of fully trained and experienced personnel in case of mobilization.
C. There is a need for different quality assurance systems for various commodity groups. However, there are certain broad goals, applicable to all. commodity groups, which should be adopted. These goals include:
1. Development of a Federal sampling inspection standard, taking into account existing standards such as MIL-STD-105, for use by all Federal agencies.
2. Increased reliance on statistical sampling procedures.
3. Development of standardized contract quality assurance provisions for use by purchasing offices, taking into account existing provisions such as the current Good Manufacturing Practices Regulations. These should be developed in conjunction with recommended Federal in-plant quality assurance programs (see Recommendation D).
4. Requirement that agencies engaged in quality assurance establish programs which encourage industry to develop and maintain industry quality programs using the current Good Manufacturing Practices Regulations as a basis.
D. Develop a standardized Federal in-plant quality assurance program for use by all. Federal agencies. This program would promote efficiency through standardization of quality assurance procedures, yet allow the flexibility needed for different commodities.
The implementing tool should be a Federal manual which would consist of:
1. A basic manual containing provisions applicable to all food commodity groups. This document could be based upon operations manuals which currently exist.
2. Appendices to the basic manual containing provisions relating to the peculiar and more specific requirements of each food commodity group.
E. Develop minimum qualification and training requirements for quality assurance personnel and first-level supervisors performing services on Federal food procurement.
The need for element two is very great in order to achieve improved management of Federal specifications for food items. Assigning the Secretary of Agriculture responsibility for these specifications is appropriate because USDA currently acts as a major focal point with industry in matters relating to grading, inspection and procurement of food products. It is desirable to have responsibility for specifications, as well as other quality assurance responsibilities, in the same agency so there can be maximum coordination potential. USDA also has a high degree of technical expertise in the field of subsistence specifications.
In order to carry out this responsibility, USDA will do the following:
Work closely with GSA to insure an efficient and effective assumption of this responsibility.
Monitor use of Federal specifications by all agencies.
Review and approve the content of all new and revised Federal specifications (except those specifications for demonstrated agency peculiar needs such as combat rations).
Insure that coordination with users, regulatory agencies, inspection and acceptance agencies, and with appropriate industry sources is accomplished.
Approve and authorize printing of specifications and insure their inclusion in appropriate indices of specifications and standards.
Exercise an initial and subsequent cyclical review of agency specifications and standards to update and insure that duplication is eliminated.
Establish procedures to insure that deviations to existing specifications are immediately identified to USDA and the specification preparing activity for appropriate action.
Improve Government dialogue with industry and stimulate industry to work with Government to formulate consensus standards and specifications that can be adopted by the Federal Government in lieu of new Federal documents, with the ultimate goal of having Federal agencies purchase commercially available products.
Coordinate research and development activities leading to development of a Federal specification when more than one agency will use the product.
Identify and coordinate user needs, tests and evaluation of products in order to eliminate duplication of effort.
Develop a planning system to provide a basis upon which new and revised documents can be scheduled and to provide the amount of effort that may be required of participating agencies to aid in the budgeting process.
Reduce the amount of time required to develop, coordinate, approve, print, and pi-omulgate specifications in order for the system to better serve its users.
Insure tliat. F( deral specifications for subsistence items are in compliance with applicable. 1,LNN,,s and regulations, unless otherwise justified.
Insure that special agency requirements, including exist ing one-z, are jus-tified fully and supported by cost/benefit analyses. 'M ilitarvy essential'' iten is are excluded from this requirement. The clas sification ''militar 'y essential'' is defined ta operational rations and those items which relate to particularly handling and s toragerequirements; e.g., special packaging and p-acking and extended shielf-life.
Identify and use regulatory agencies' inputs to specifications wherevecrpsIle
Under this plan, collateral Gjovernmnent agencies wvill:
Continue their independent research and development activities in support of user specified needs.
Retain the designated responsibility for maintenance of and/or re-vis-ion of existing assigned specifications and standards until such time as reass-iged ifter consultation with concerned agencies.
Advise USDA when a new or revised specification is to be developed.
Provide technical support to the extent possible to develop new specifications for other requiring agencies.
Within existing capabilities and resources, provide test and evaluation services to other requiring agencies.
Assure that all specifications are coordinated with all user and interested agencies and the industry.
Submit for approval all new and revised specifications to USDA, except those that represent service unique requirements having no broad Government interest.
Maintain close contact and communication with USIDA.
Element three is essential in order to make maximum use of an existing qualified organization and to accelerate progress during the initial stages of implementing the executive branch plan. For the sake of efficiency and timely action, it is recommended that implementation of the plan begin immediately following the plan's approval. This recommendation amends the Interagency Food Quality Assurance Planning Committee charter by deleting the provision for the (50 day time period for official agency comments (Section VI.F.).
Many aspects of the executive branch plan necessarily lack specificity and will have to be addressed, in detail, during the implementation of the plan. The following areas warrant consideration during the implementation phase:
The Interagency Food Quality Assurance Implementing Committee should initially establish specific implementation steps and target dates for their completion. Periodic progress reports should be made to the Office of Federal Procurement Policy through the Secretary of Agriculture.
Provision must be made to allow Federal agencies to assess the impact of any recommended changes on their present supply distribution and food service systems in terms of cost, utility and quality prior to agreeing to decisions which could impede mission -effectiveness.
The necessity of identifying the responsibility and role of using Federal a gencies in the revision of existing specifications or the development of new specifications should be acknowledged.
Identify how the USDA will improve Government dialogue with industry, and describe how it will impact upon the existing role of the Natick Research and Development Command in the specifications area.
Define the agency level at which USDA will exercise its new responsibilities.
Identify to what extent the USDA will coordinate research and development efforts for subsistence items.
Identify how the USDA will coordinate user needs, tests and evaluation of products in order to eliminate duplication of effort.
The procedures for developing and maintaining quality assurance expertise of military inspectors for mobilization and overseas requirements should be outlined in detail.
An appeals process must be developed for agencies to challenge decisions with which they disagree.
Additional funds, and possibly personnel, may be required for USDA to initially accomplish its new assignments. Similar assistance may 'be required for NMFS. This issue requires close coordination and cooperation between USDA/ NMFS and other interested agencies, in particular, the Office of M\anagement and Budget. The long range goal, however, is to have the Government-wide quality assurance program become Self-supporting by achieving greater efficiencies and
LONG RANGE RECOMMENDATION
Following the implementation of this executive branch plan, the establishment. of a single, separate organization responsible for all voluntary and mandatory Federal quality assurance food programs should be investigated in order to determine if such an organization would result in more efficient, accountable and economical operation for the benefit of the Federal government as well as the general public.
WILLIAM T. MANLEY,
Agricultural Marketing Service, U.S. Department of Agriculture.
PAUL H. RILEY,
Acting Principal Deputy Assistant Secretary of Defense (Logistics), Department of Defense.
JOSEPH P. HILE,
Associate Commissioner for Compliance, Food and Drug Administration, U.S. Department of Health, Education, and Welfare.
JOSEPH W. SLAVIN,
Assistant Director for Fisheries Development, National Marine Fisheries Service, U.S. Department of Commerce.
CLYDE C. COOK,
Director, Supply Service, Veterans Administraion.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,
PUBLIC HEALTH SERVICE, FOOD AND DRUG ADMINISTRATION,
Memorandum: My9 97
To: William T. Manley, Chairman, Interagency Food Quality, Assurance
From: Associate Commissioner, for Compliance, FDA (HFC-1). Subject: Explanatory notes in support of FDA's concurrence with the executive
The Food and Drug Administration (FDA) concurs in the executive branch plan for a government-wide food quality assurance program (GWQAP) for food procured by Federal agencies prepared by the interagency committee. There is one aspect of the plan, however, on which the agency wishes to comment specifically in providing its concurrence.
Wve at FDA do not believe that the ongoing mandatory programs have been given sufficient prominence in the committee's recommended implementing plan. Our understanding of both the OBM and GAO study reports, which led to the development of this plan, is that these reports projected that the economies achievable would be obtained only if the ongoing mandatory quality assurance programs for the general public were utilized by the Federal procurement system as well. In this regard, hundreds of inspectional manyears are currently devoted to plant and product quality assurance activities each year by APHIS and FDA; and numerous standards for product quality and plant performance have been issued as Federal regulations by these same agencies. The plan should emphasize that requirements imposed by Federal procurement agencies, which are over and above these ongoing activities, should be fully justified.JOEHP i.
HIGHLIGHTS OF APRIL 28, 1977 INTERAGENCY FOOD QUALITY ASSURANCE PLANNING COMMITTEE MEETING
Place.-Room 4960 of USDA South Building
Time..-9:05 to 10:30 a.m.
Attendes.-William Manley, AMS (USDA); Charles Brader, AMS (USDA); E ddie Kimbrell, AMS (USDA); Walter Armbruster, AMS (USDA),; William Franks, AMS (USDA); Herbert Rorex, FNS (USDA); Harrell Altizer, DOD;
Cdr. John Wyatt, DOD; Joseph Hile, FDA; Benjamin Gutterman, FDA; Joseph Slavin, NMFS; Louis Sorett, OFPP; John Payne, VA; Robert Coakley, Senate Staff.
Highlights. 1. Dr. Armbruster distributed copies of, and highlighted, the recommendations of the Interagency Planning Committee on Marketing Information for Food Procurement. (Copies of the recommendations are included withi these highlights only for those people not attending the meeting.)
2. Dr. Manley introduced Mr. Robert Coakley who replaces Ms. Mary McAuliffe. Ms. McAuliffe is now serving with the Senate Commerce Committee.
3. Dr. Manley asked each agency representative to comment on the April 14 draft of the executive branch plan. Mr. Slavin (NMFS), Mr. Altizer (l01)) aid Mr. Payne (VA) stated that their agencies approve the plan "as is". Mr. Franks described several minor USDA changes to the draft which were accepted by the Planning Committee members. Mr. Itile (FDA) expressed concern that the role of the regulatory agencies, FDA and APHIS, did not receive proper emphasis and that the wording of the plan should be more positive, e.g., use words like shall and will in place of could and should. After some discussion of these concerns, the Planning Committee members unanimously agreed that the most appropriate way to resolve these issues is for FDA to submit "interpretive comments" which will be included with the plan as an addendum.
4. Prior to submission of the executive branch plan to OFPP, concurrence signatures will be obtained from Planning Committee members, or other appropriate agency officials. These concurrence signatures will be forwarded with the plan.
5. Dr. Manley expressed his appreciation for the excellent cooperation which he received from the Planning Committee. He also stated that, because of the current reorganization within USDA, he will probably not be involved with the implementation of the plan.
]RECOMMENDED EXECUTIVE BRANCH PLAN FOR EFFECTIVE USE OF MARKET
INFORMATION IN THE FEDERAL FOOD PROCUREMENT SYSTEM
At the request of the Administrator for Federal Procurement Policy, the Secretary of Agriculture assumed responsibility for developing an executive branch action plan to provide usable and timely market information to meet Federal agency procurement needs. The Secretary of Agriculture delegated this responsibility to the Administrator of the Agricultural Marketing Service.
To carry out the market information assignment, the Secretary of Agriculture established an Interagency Planning Committee on Market Information for Food Procurement. The planning committee consists of: a chairman and three other representatives from the Department of Agriculture; o ne representative each from the Department of Defense, the Department of Commerce and Veterans Administration; and an ex officio representative from the Office of Federal Procurement Policy. The committee considered available information, procurement agency activities and information needs, and possible improvements in the use of available information by Federal procurement agencies. The report of this comraittee is contained in the following pages. Summary comments from committee discussions and a number of recommendations are presented.
THE FEDERAL PROCUREMENT SYSTEM FOR FOOD
Organization of the Procurement System
Department of Defense.-Purchasing decisions for all subsistence products are made at the Defense Personnel Support Center, Philadelphia, Pennsylvania. An organization chart showing those responsibilities for procuring the Department of Defense's subsistence needs is attached (Attachment 1). While the Defense Personnel Support Center has regional offices doing some buying in addition to that done by the central office at the Defense Personnel Support Center, all offices are directly controlled by the Defense Personnel Support Center. The Director of Subsistence at the Defense Personnel Support Center is the one man on the Defense Personnel Support Center Commander's staff who is responsible for making these decisions. While the military services tell the Defense Personnel Support Center in essence what to buy, the Defense Personnel Support Center determines how much to buy, when to buy it, and where to store it.
The list of critical food items for which the Defense Personnel Support Center could utilize market forecasts is subject to very little change. These basic food items are bought centrally at the Defense Personnel Support Center and subject to few if any constraints, although specifications do change from time to time.
The timing of the procurements for these critical products varies with the products. There are few regulations affecting when or how much of these critical products the Defense Personnel Support Center buys. But procurement fund availability may prevent adjustment of purchase timing based on economic information. If there is a shortage of a particular product, the military services must approve the Defense Personnel Support Center's purchase of a substitute product.
Veterans Admhtistration.-Thc Veterans Administration Marketing Center, Hines, Illinois, intakes central purchase decisions for- subsistence items which are d distributed through three depots and eight contract frozen food points. Purchases through this portion of the system comprise about one-third of total purch-Iscs. The marketing staff also has contract responsibility for specific subsistence supply schedules. An organization chart shoNNino, the authority and responsibilities for, suh,;isteuce in the Veterans Administi-ation marketing system is attached (Attachment 2).
Timing of purchase depends on the commodity. Fruits and vegetables are usually purchased during the seasonal pack period, except when it is necessary to restock inventory. Frozen meat is one commodity that is purchased as required to fill stock requirements. Other commodities that are purchased as required are coffee, sugar, and manufactured beef items on a modified Economic Order Quantity basis. Semiannually, buys are made for rice and potatoes.
Subsistence is also purchased by 160 hospitals throughout the United States and Puerto Rico. Veterans Administration hospitals purchase about two-thirds of subsistence needs from other than the Veterans Administration marketing system. These other sources include open market, Federal supply schedules, and the Defense Logistics Agency. The subsistence items Veterans Administratiol purchases are for hospitals and specifications are closely followed.
Department of Agriculture.-Decisions to purchase are made by the Assistaint Secretary having jurisdiction over Food and Nutrition Service activities. An annual purchase plan is developed by the Food and Nutrition Service with input from the appropriate commodity divisions of the Agricultural Marketing Service and the Agricultural Stabilization and Conservation Service, usually from midApril to mid-May, for the following fiscal year. The Food and Nutrition Service provides data on items, quantities needed and desired delivery periods for various commodities based on data reflecting the needs and preferences of the end users. The Agricultural Marketing Service and the Agricultural Stabilization and Conservation Service provide data on product availability, estimated price and the most favorable procurement period. These data are used to develop a purchase plan to utilize the total funds authorized for the fiscal year's program.
A composite commodity procurement docket based on the plan is developed and agreed to by the three Administrators (Food and Nutrition Service-Agricultural Marketing Service-Agricultural Stabilization and Conservation Service) and the Assistant Secretary. Finally, the Commodity Credit Corporation Board approves the docket as the Department of Agriculture's purchasing authority.
Based on the approved plan, announcements to purchase at the most favorable times are made by the appropriate commodity division of the Agricultural Marketing Service or the Agricultural Stabilization and Conservation Service having jurisdiction over the subject commodity. Delivery periods set forth in the announcements are based on data the Food and Nutrition Service has accumulated from the users of the product. The decisions to accept or reject bids are made jointly by the Food and Nutrition Service and either the appropriate Agricultural Marketing Service or the Agricultural Stabilization and Conservation Service division, depending on price and quantity needed and offered. (The Department of Agriculture's procurement organization is shown in Attachment 3.)
General characteristics of purchases
Federal agency purchases appear to be fairly steady from one year to the next and are based primarily on demand history and continuity of menus.
The portion of purchases made centrally versus that by local units differs among Federal agencies. The Department of Defense either makes or controls centrally almost all purchase decisions for food. The Veterans Administration buys about one-third of the total requirements centrally with the remainder bought by local hospitals without direct control from the Veterans Administration. The Food and Nutrition Service purchases centrally approximately onefifth of the total purchase requirements for school lunch programs. The remainder is purchased locally by the school systems, based partly on Federal specifications but with little input from the Department of Agriculture relative to supply and demand factors and their implications for purchases.
The timing of decisions also varies among the agencies. Initial budget decisions are made approximately one year in advance, but many of the actual purchases occur on a monthly or more frequent basis. Certain more storable items are purchased much less frequently such as during the annual seasonal pack period.
Info 'ation used by procurement agencies
Varying amounts of information are currently used in Federal procurement activities. For example, the Defense Personnel Support Center issues a monthly availability forecast for fresh fruits and vegetables, developed from various Department of Agriculture and non-government reports on price and quantity and analyses by the Defense Personnel Support Center economists. The I)efense Personnel Support Center has a research group developing forecasting models for
use in food procurement decisions. That group utilizes a number of the available market reports from government agencies.
The Veterans Administration receives some information from Federal sources but probably utilizes relatively little of it. They do not find most of the information readily usable by their procurement people in hospitals. The Veterans Administration does use information from commercial publications, but these are not adequate to cover needs.
The Department of Agriculture's Food and Nutrition Service relies heavily on information and analyses by other agencies within the Department of Agriculture for making decisions relative to the timing and composition of its purchases.
Constraints on purchases
Flexibility in Federal purchases to adjust to price and quantity information available throughout the year does exist. Such flexibility is dampened by historical demand experience, inventory control procedures, procurement funds restrictions, and some restrictions imposed by agency procurement regulations. Requests based on historical menus and demand experience may be more limiting than regulations. If there is a shortage of a particular product, however, the military services must approve the Defense Personnel Support Center's purchase of a substitute product.
The market information implementing organization should examine in more detail any constraints that exist. Coordination between the activity of an implementing organization for market information and any similar organization oper'ating on governmentwide quality assurance problems in food procurement is needed to examine any procurement regulations which may hinder improvements in procurement decisions.
Procurement funding practices appear to be more restrictive than procurement regulations. For example, the Department of Agriculture is predicting price increases for beef in the second half of 1977. This would indicate that purchases of storable beef products should possibly be purchased now for later use. If funding practices preclude flexibility to do so, sizable potential savings may be lost and the total subsistence expenditure for the year increased significantly. Funding practices tied to the fiscal year provide neat administrative packages, but may lead to uneconomic timing of purchases compared to what the market situation would dictate.
There is a potential problem of utilizing market information related to volume of commodity available, if the sellers' inventory consists of package sizes and types which conflict with package requriments of buyers. This problem should be looked at in further detail by the implementing organization for the governmentwide food quality assurance program which the Department of Agriculture is spearheading.
However, if a crop size is projected and that information is used by purchasing agencies to make timely commitments to sellers, the pack can be put into the desired size and type containers. Such timing appears feasible and is utilized to a great extent. This minimizes the possible conflicts between package sizes and types available and those desired.
Information is available from the Department of Agriculture and Department of Com-merce for most major agricultural food commodities and fish products. The informat ion is available for general product categories, and some major items within the categories. It is not very precise for projections one year ahead. As the period of projection is reduced to semiannually and quarterly, refinements in product categories and specificity of price and quantity data occur. Projections for the next month may be fairly specific. Data are generally available on prices and lproduiction, with limited information on inventories. General commentary on expected market conditions is provided.
A irfector-y listing of reports available dealing with food commodities groupedl 1)V cornillwdity categ-ory is being prepared. The directory will contain introductory material describing generally the types of information published by different agencIe Those resp~onsible for report content, will be identified. This should enable better USQ, to he made of the information contained in the reports, especially in the
cases where more dletailed understanding of the information is needed. Attachmerit 4 pi'ovide1csan example of reports available for eggs.
CONCLUSIONS OF THE PLANNING COMMITTEE
1. Much information about price and availability of subsistence item i< nerated by Federal agencies and is available to procurement agenc1ies. It has not been utilized to the exetent desirable because:
a. Users are not aware of its availability.
b. Its content is not readily usable by recipients.
2. Coordination between government agencies during large procurements h s been practically nonexistent.
3. Increased use of available information and better interageicy 'op ration may increase the number of bidders interested in dealing with the governor t.
4. The Federal Supply Catalogue numbering system may be ueful to failitat, exchange of information between government agencies, but has not been u-c in that manner.
PLANNING COMMITTEE RECOMMENDATIONS
1. The Department of Agriculture should have responsibility for overall management of a market information system for use in food pirocureiiment by IFe' lral agencies.
a. The Department of Agriculture should prepare and distribute a directory of reports available from the Department of Agriculture, Department of Conn er(*, and commercial sources of which they have knowledge. Content should be briefly described and a contact identified for each publication.
b. As part of the above directory, a list identifying people in major sub-ist(nce organizations at agency contact points should be prepared and updated quarterly. Local supply offices should also be identified, including those for Veterans Administration hospitals, etc.
2. The head of each procurement agency should use the market information system as a management tool to improve the effectiveness of the Federal food procurement programs.
a. Any regulations or procurement funding limits which may prevent basing procurement timing on economic factors should be carefully evaluated.
b. The need for a training program to enable procurement personnel to better utilize available information should be evaluated. Consideration should be given to the needs of those indirectly involved in Federal procurement, such as school, hospital, and prison purchasing agents.
c. Methods of exchanging information about planned major procurements should be examined, with the intent of minimizing competition in the market between Federal agencies.
d. To increase the number of potential bidders, agencies should exchange mailing lists used in bid solicitation.
3. This planning committee should be designated as an implementing organization to monitor progress in incorporating these recommendations into the procurement system. Among its responsibilities should be:
a. A consolidated report, tailored to procurement officials, developed from existing information in the Department of Agriculture and the Department of Commerce's National Marine Fisheries Service may be needed. Additional evaluation is required of the need for a consolidated report and content thereof, and the ne d for any additional information. Copies of currently available publications have been distributed to procurement agencies for evaluation of their content and usefulness. Commens from the procurement agencies should be evaluated to determine what is needed.
b. The Federal Supply Catalogue numbering system related to subsistence procurement should be evaluated for possible incorporation into the information flow between Federal agencies.
ATTACHMENT 1.-Defense Logistics Agency organization chart.
Director, Defense Logistics Agency
Commander, Defense Piersonnel Support Center
Director, Directorate of Subsistence
*Chief, Supply Operations Chief, 'Technical & *-Chief, Trocurement
Division Quality Assurance Division
*The Supply Operations Division decides when to buy and how much to buy.
**The Purchasing Division decides how to buy and does the actual buying.
ATTACHMENT 2.-Veterans Administration subsistence organization chart.
Director, Sipply Service
Chief Marketing Center Chief, Supply Fund
Procurement Division* (Hines, Illinois) Management Staff***
Chief, :arketing Division for Subsistence**
*Reviews bid solicitations for purchases.
* Responsible for procurement and quality assurance.
* *Manages funds for inventory and investment.
ATTACHMENT 3.-Department of Agriculture food procurement organization chart.
Commodity Credit Corporation Board
Assistant Secretary for Tood and Consumer Services
Administra~tor, F ood and Nutrition Service
A.-inistrator, Agricultural Administrator, Agricultural
Niarketing Service Stabilization and Conservation Service
Poultry Market News Poultry and Egg Report.-AMS daily and weekly reports that include current and historical national, regional, and local price, supply, inventory information such as delivery prices, estimated slaughter, I)roiler set and chicks placed, cold storage holdings, futures market information, defense purchases. Summarizes trading conditions and market highlights |)y geographic region. Contact: Ray Wruk 202-447-6911.
Poultry Market Statistics Annual Summary.-ssued every April by AMS. Includes national, regional and local price, supply and inventory data for the past year on shell eggs, frozen, (tried, and liquid eggs, live and processed poultry, (lucks, rabbits, squabs, live and processed turkey. Contact: Ray Wruk 202447-6911.
Eggs, chickens and turkeys.- Monthly report by SRS. Covers national, regional, and local, current and historical supply information. Includes general summary of the market conditions for these three commodities for the preceding month. Contact: Tom Cryer 202-447-2123.
Cold storage.- Monthly SR.S report on national and regional cold storage holdings of over 70 commodities including shell eggs and frozen eggs.
Regional cold storage holdings.-Annual SRS report summarizing end-of-month stocks for the previous year by geographic regions. Contact: Mel Banks 202447-6351.
Egg products.-Issued 13 times a year by SRS. Includes current and historical national supply information. Contact: Tom Cryer 202-447-2123.
Poultry production, disposition and income.-Issued each April by SRS. Gives national, regional, and local supply information for the preceding year. Contact: Tom Cryer 202-447-2123.
Poultry and egg situation.-Issued quarterly by ERS. Analyzes the current situation and outlook. Covers national, regional, and local supply and inventory information. Contact: Tom Crver 202-447-2123.
Poultry and egg statistics.-ERS periodical. Includes historical information on prices, supply and inventory on national, regional, and local basis. Contact: William Cathcart 202-447-8800.
Poultry and eggs (production).-Quarterly FAS circular includes current and historical international and national supply information; current and projected national and international inventory information. Contact: Rolland Anderson 202-447-7217.
Poultry and eggs (world trade).-Annual FAS circular includes national and international supply and outlook information for shell eggs, egg products and poultry meat. Contact: Rolland Anderson 202-447-7217.
Poultry and eggs (U.S. exports).-Annual FAS circular includes current and historical international and national supply information on poultry meat, hatching eggs, chicks, and poults, and eggs and egg products. Contact: Rolland Anderson 202-447-7217.
EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF MANAGEMENT AND BUDGET, Washington, D.C., July 29, 1977.
Memorandum for: Secretary of Agriculture, Secretary of Commerce, Secretaryof Defense, Secretary of Health, Education, and Welfare, Secretary of the Interior, Secretary of Transportation, Attorney General, Administrator of
General Services, Administrator of Veterans Affairs.
Subject: Quality assurance in the procurement of food by Federal agencies.
The attached plan for a Government-wide quality assurance program for food procured by Federal agencies, which was developed by your agencies under Department of Agriculture leadership, is hereby approved. The readiness of all participants to set aside parochial interests in order to achieve Government-wide management improvement is commendable and greatly appreciated.
The Secretary of Agriculture is requested to continue his leadership of the interagency effort and to direct the implementation of the Plan. When the Plan is implemented, the Secretary of Agriculture will manage quality assurance policies and procedures as they relate to food procured by Federal agencies.
I would like to emphasize the following important provisions of the Plan:
Department of Agriculture and the National Marine Fisheries Service in the Department of Commerce are to assume, at a date to be determined, quality assurance responsibility from the Department of Defense for those foods for which these agencies have quality grading and inspection capabilities, when quality assurance is performed at origin locations in the United States. This arrangement does not preclude at any of the three agencies from performing selected food inspections at destination locations but only when such inspections are consistent, with quality characteristics used during origin inspections.
Secretary of Agriculture is to assume f ull responsibility for managing the Federal specification system for food items. Assumption of this responsibility will require appropriate consultation with the Administrator of General Services. Development of a system for coordinating the specification research and development activities of Federal agencies that will maximize cross-utilization of resources and expertise is particularly important.
Current interagency quality assurance activities should be embraced within the Plan, and the results should be used to assist the implementation of the overall Government-wide effort.
We expect further details to be worked out as we go forward. In this connection, the Secretary of Agriculture is requested to study and identify all the Government's specification management, testing, and inspection activities related to food to determine which of these fall within the Plan. Following this, appropriate agreem(ents between the Department of Agriculture and the affected agenc-ies shouldI be developed in order to make full use of these activities and to effect thte necessary personnel transfers. These agreements should assume that adjustmentt% will be made in agency personnel celig to reflect the personnel transfers and should ensure that the rights of all employees are protected andl their interestsgiven every consideration under applicable rules and regulations of the CiN'il Service Commission. The recommnendled implementation must demonstrate that. the actions prescribed will result in overall cost savings and increased efficiency to the Federal Government.
We recognize that the transfer of management responsibilities covered in the Plan will not he an easy task. Nevertheless, the anticipated benefits necessitate, timely and continual action. Accordingly, the Secretary of Agriculture is requested to provide this Offi(c by January 1978 with major implementation milestones for Fiscal Year 1978. The implementation schedule should allow adequate time for us to( review an I aup rove the propose (1,I arraLngemients.
The Office of Federal Procurement Policv staff oversight responsibility is assigned to Louis Sorett, Deputy Assistant Admiinistrator for Logistics, telcphione 395-6194.
LESTER A. FETTIG,
]EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF MANAGEMENT AND BUDGET,
Washington, D.C., July 29, 1977.
Memorandum for: The Secretary of Agriculture, the Secretary of Commerce,
the Secretary of Defense, the Administrator of Veterans Affairs. Subject: Marketing information for food procurement.
Bv memorandum of October 16, 1975 to the above addressees the Administrator for Pederal Procurement Policy requested the Secretary of Agriculture to a ;,;;Ilnle lead agency responsibility for developing an executive branch plan to prox-ide efficient and economical delivery of useable and timely marketing information to meet Federal agency food procurement needs. Federal agency expenditures for food are estimated to be $3.5 billion annually.
In response, the Secretary of Agriculture established the Interagency Planning Committee on Marketing Information for Food Procurement under USDA chairmanship with representation from each of your agencies. The committee submitted its report and recommendations on April 29, 1977. A copy is attached for your review.
The committee concluded that each individual agency has developed a method of obtaining some marketing information and that other marketing information is available but agencies either are not aware of its availability or the contents are not readily useable. In addition, the committee concluded that there is a lack of ,coordination between Federal agencies during large procurements which has caused them, at times, to be in competition with one another for the same products.
The principal objective of the plan is contained in recommendation 1 which states that the Department of Agriculture should be responsible for overall management of a market information system for use by Federal agencies in food procurements. This recommendation also would require USDA to prepare and distribute a directory of marketing reports and of agency contact points.
Recommendation 2 speaks to the responsibility of procuring agencies to use the market information system as a management tool and sets forth a number of steps to improve the Federal procurement of food.
Recommendation 3 proposes that the planning committee be given responsibility for implementing the report and its recommendations.
With the concurrence of responsible officials of your agencies, I have approved recommendations 1 and 2 as measures needed to establish a Government-wide system for providing marketing information that will facilitate effective management of food planning and pi ocurement by Federal agencies.
Recommendation 3 is also approved, but the continued utilization of the
-study committee members is appropriately a matter for individual agency determination. In this connection, the Secretary of Agriculture is requested to
an implementing organization under USDA leadership which would include participation from the Department of Commerce, Department of Defense and the Veterans Administration. The objective of this organization will be to develop a schedule for the incremental establishment of a Government-wide food marketing information management system in accordance with the Planning Committee's recommendations.
Continuing OFPP oversight of the attached Executive branch plan will be
-exercised by Louis Sorett, Deputy Assistant Administrator for Logistics, OFPP, telephone 395-6194. LESTER A. FETTIG,
DEPARTMENT OF AGRICULTURE
OFFICE OF THE SECRETARY)
Washington, D.C., September 28, 1977.
Hon. LESTER A. FETTIG,
Administrator, Office of Federal Procurement Policy, Executive Office of the President,
Office of lVanagement and Budget, Washington, D.C.
DEAR MR. FETTIG: This is in response to your memorandum of July 29, 1977, approving the Executive Branch Plan for a Government-wide quality assurance program for food procured by Federal agencies. In our view, this action will result in efficiencies throughout the Government's food procurement activity when fully implemented.
I accept lead agency responsibility for implementing the quality assurance program. Dr. Robert Angelotti, Administrator, Food Safety and Quality Service, will provide the U.S. Department of Agriculture (USDA) leadership. He has established an Executive Board under his leadership, which is made up of other key Department of Agriculture officials and Department of Defense officials. A representative of the Office of Federal Procurement Policy will serve as an advisor. This Board is addressing the immediate task of transferring origin food inspection activities now carried out by the Department of Defense, to this Department in accordance with the Executive Branch Plan and the timetable dictated by Congress during recent budget hearings.
The additional program responsibilities to be assumed by this Department are accepted with the understanding that sufficient personnel ceilings and funds will be made available to us.
We shall inform you of the implementation milestones by January 1, 1978, as requested. Mr. Eddie F. Kimbrell will be coordinating the implementation of the plan and is the contact for USDA. His telephone number is 447-4016.
CAROL TUCKER FOREMAN,
DEPARTMENT OF AGRICULTURE,
OFFICE OF THE SECRETARY,
Washington, D.C. October 18, 1077.
Hon. LESTER A. FETTIG,
Administrator, Office of Federal Procurement Policy, Office of management and
Budget, Washington, D.C.
DEAR MR. FETTIG: This is in response to your memorandum of July 29, 1977 approving the Executive Branch Plan for Effective Use of Market Information in the Federal Food Procurement System. In our view this action will result in efficiencies throughout the Government's food procurement activity when fully implemented.
I accept lead agency responsibility for implementing the marketing information program. J. Dawson Ahalt, Acting Chairman of the newly established Worll Food and Agricultural Outlook and Situation Board, will provide the Department of Agriculture (USDA) leadership. He is establishing an Executive Board which will include other USDA officials and officials from the Department of Commerce, Department of Defense, and the Veterans Administration. A representative of the Office of Federal Procurement Policy will serve as an adviser. The Board will first establish a charter for its activities and consider how distribution of the Department's outlook information can be made more effective to food procurement officials.
Dawson Ahalt's telephone number is 447-8651.
HOWARD W. HJORT,
Director of Economics, Policy Analysis and Budget.
COMMITTEE ON GOVERNMENTAL AFFAIRS, SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND
Washington, D.C., April 25, 1977.
H~on. BOB3 BERGLAND,
.Secretary, U.S. Department of Agriculture, Washington, D.C.
DEAR MR. SECRETARY: On October 18, 1976 1 wrote to Acting Secretary of Agriculture, John A. Knebel concerning a personnel action undertaken by the
Agriculture Department against Mr. John Coplin, the Chicago main station supervisor for the Department's Meat Grading Branch.
On September 23, 1976 my Subcommittee on Federal Spending Practices held a hearing to examine the department's personnel action. In my letter of October 18, 1 stated that, "_. - the testimony received by the committee may have brought forth new information and judgements which may not have been either available or considered in earlier department reviews of the Coplin case." I requested that your office (1) review the transcript and the record relating to the personnel action against Mr. Coplin and his subordinates at the Chicago station;
(2) comment on the testimony of the individuals who appeared; and (3) undertake a final review of this personnel action in light of this testimony.
I asked to receive the results of the review by November 15, 1976.
After November 15, Deputy Assistant Secretary John M. Damgard contacted the subcommittee and indicated that the nature of the request required considerable research and more time was needed.
Before his departure from the Department, Mr. D amgard wrote me in a letter I received March 14, 1977 that an Ad Hoc Review Group had been established to look into the matters that I felt the testimony raised and that the inquiry was still in full swing.
Staff of the subcommittee met with Assistant Secretary J. P. Bolduc on April 1 to discuss the department's progress in responding to my requests of October 18.
I now understand that allegations raised by Mr. Coplin will take additional time to investigate before my requests can be fulfilled. However, regarding my specific request that the personnel action taken against Mr. Coplin be reviewed, I gather from Mr. Damgard's interim report and the staff discussions with Assistant Secretary Bolduc that your office does not view the personnel action taken against Mr. Coplin as inappropriate.
I believe that material the subcommittee received and made part of a public record previous to your arrival at Agriculture may have been ignored in earlier reviews of the Coplin case.
Given my understanding that your office presently feels that the personnel action was appropriate I feel compelled to ask you some direct questions concerning the matter. Your written response would be appreciated.
Both Mr. Lawrence Thackston, present Director of the Personnel Division of the Agricultural Marketing Service, and Mr. John Tromer, former Director of Pers.,onnel of the Agricultural Marketing Service appeared before the subcominittee. As Acting Personnel Director, Mr. Thack-ston had responsibility for ,sustAaining the charge, "Neglect of Duty-Failure to Follow Instructions, against Mfr. Coplin. I had as ked Mr. Tromer, as a former Personnel Director, to objectively review the Coplin casi,-e for the subcommittee.
During the hearing I asked b)oth gentlemen some similar questions. The difference in their responses raised serious questions in my mind.
I asked Mr. Thackston whether the intent of the person charged would be an ele ment for consideration, especially in a charge with failure to follow instructions-. If e responded that "Ordinarily, the intent would not be a factor. (p. 293, hearings before the subcommittee, May 10, 12, 13 and September 21 and 23, 1976, enclosed.)
Mr. Tromer, in response to this question responded, "I would thinks; At
least in my experience we would always consider willful intent as a part of the charge. We would be interested in the person's motive." (p. 304)
Mr. Secretary, do you feel in a case where neglect of (uty, failure to follow instructions has been charged, the intent of the person charged is an important consideration?
Based on your review of this personnel action, have you determined that Mr. Coplin willfully intended to disobey instructions?
I asked Mr. Thackston whether if Mr. Coplin's superior had told him that he could go ahead and file vouchers on a 12-cent, rather than 9-cent basis; woull he still have held that Coplin was guilty of an infraction? Mr. Thackston respondeI that, "It is difficult to answer that, because I was never able to arrive at that conclusion. In this case it is interesting to note that Mr. Coplin is the official who is charged with applying the Government travel regulations, he approves travel vouchers.
His authority to do so flows to him not through Mr. Hallett, the superior we are talking about, but from the Division Director, Mr. Pierce.
Mr. Hallett technically would not have had the authority to, in effect, rule on whether or not there was a proper claim." (p. 293)
When I asked Mr. Tromer the hypothetical question that if the actions to submit vouchers were taken in response to guidance from a telephone conversation with his chief and they later came into dispute, would he consider that such an action constituted neglect of duty, failure to follow instructions, he responded that he would not. (p. 305)
In effect, Mr. Thackston minimized Mr. Coplin's explanation of the reason he submitted the 12-cent vouchers by noting that technically, Mr. Hallett would not have had the authority to rule on whether or not there was a proper claim.
In effect, Mr. Tromer indicated that whether Mr. Coplin had received such guidance fiom Mr. Hallett was instrumental to the decision as to whether to sustain the charge.
Mr. Secretary, do you feel that the issue of whether or not Mr. Coplin received approval to submit the 12-cent vouchers from Mr. Hallett on the telephone as he and others claim and Mr. Hallett denies, is a major question that should be answered before charges of failure to follow instructions are sustained?
Mr. Thackston acknowledged that he was aware of the conflicting understanding that Mr. Coplin and Mr. Hallett had as to what was said in a January 14 telephone conversation yet he sustained the charges. (p. 294)
When I asked Mr. Tromer, "if you had still been the personnel director or if you were the personnel director making this inquiry, would you have sustained the charges against Mr. Coplin?," he responded as follows:
"Based upon the record, as I reviewed it, and more importantly, the conflict that existed over the telephone conversation that I recall was the January 14 telephone conversation, where there were diametrically opposed views as to what was said, I could not have sustained the action." (p. 306)
Mr. Secretary, do you believe there is any more reason to believe Mr. Hallett on what he said in the January 14 telephone call than Mr. Coplin?
Given the conflicting statements over whether Mr. Hallett did or did not tell Mr. Coplin to go ahead and submit the 12-cent vouchers, do you feel Mr. Thackston should have sustained the charges against Mr. Coplin?
I would like also to bring to your direct attention certain facts that were presented in the hearing or of which your office is aware, and ask you some additional questions.
The alleged failure to follow instructions occurred in January and February of 1975.
The alleged offenses were reported to the Personnel Division by memorandum of June 11, 1975, from John Pierce, Director, Livestock Division to Richard Reiland of the Personnel Division. The memorandum was prepared and written in Mr. Hallett's office by he and his staff.
Letter of charges proposing five-day suspension for "Neglect of Duty-Failure to Follow Instructions" is dated August 15, 1976.
John Coplin came to talk to the subcommittee, at subcommittee request, on July 23 and 24.
Mr. Hallett accompanied Mr. Coplin and I had to ask Mr. Hallett to leave subcommittee offices so that we could talk to Mr. Coplin privately. (Mr. Thackston did not profess any awareness of this fact in his decision.)
Upon his departure, the Staff Director of the subcommittee commented to Mr. Hallett that he hoped the incident would not reflect upon Mr. Coplin's career., Mr. Hallett responded to the effect that he could not see but how it could. (Mr. Hallett, under oath denies this. Your office is aware of sworn statements from the Staff Director and two other subcommittee staff who overheard and corroborate this account.-Mr. Thackston was not aware of this incident prior to making his decision.)
A "Proposed Adverse Action Checklist" relating to John Coplin, an internal Personnel Division worksheet, is characterized by Mr. Thackston as follows:
"Generally this is checked off at the last stage before a letter of proposal is issued to make sure that everything has been covered, every legal and regulatory requirement. It is usually the very last step before a letter of charges is issued." (p. 299)
The checklist reveals the following facts about the processing of Mr. Coplin's case.
SThe checklist was completed and signed with the exception of one item, by July 25, a day after Coplin's appearance. iThe one item which appears to have been checked "no"~ on July 25 and initialed "yes" on August 8-15 days after Coplin's appearance-reads as follows: "Do we have clearance from applicable division for the administrative action." (While the checklist was in the Personnel Division files, the above facts were not acknowledged as a consideration in Mr. Thackston's decision.)
A memorandum to Richard Reiland of the Personnel Division, from John Pierce, about the proposed disciplinary action against John Coplin indicates: ,(p. 336)
That on August 7, Mr. Hallett met with Mr. Reiland to "review the letter of charges and proposed disciplinary action against John Coplin."
That Mr. Coplin's subordinates, who submitted similar vouchers be also considered for appropriate disciplinary action. (While the memo was in Personnel Division files, Mr. Thackston was apparently unaware of the meeting.)
In September of 1975, prior to Mr. Coplin's oral conference with Mr. Thackston in October of 1975 wherein Mr. Thackston sustained the charges, Mr. Hallett lowered Mr. Coplin's annual employee appraisal due to his failure to follow instructions. (p. 300) (Mr. Thackston had no knowledge of this action prior to his decision.)
Mr. Secretary, I would like to know the following:
Has your review of this disciplinary action determined that sworn statements by my subcommittee staff concerning what Mr. Hallett said in a subcommittee office on July 23, 1975 after I asked him to leave has no bearing oi relevance to the consideration of whether the personnel action taken against Mr. Coplin was appropriate?
Has your review of this disciplinary action determined that because the offenses with which Mr. Coplin was charged were reported to the Personnel Division by a June 11 memorandum from Mr. Pierce, that events that occurred after July 24, 1975, as reflected in the internal personnel checklist and Mr. Pierce's memorandum of August 11, did not influence, advance, or promote the personnel action against Mr. Coplin?
Has your review of this disciplinary action determined that Mr. Hallett's August 7 meeting with Mr. Reiland of the Personnel Division, as documented by Mr. Pierce's August 11 memorandum, had no relevance or bearing on whether alleged offenses reported to Personnel on June 11 were pursued by the Personnel Division?
In light of the fact that their alleged offenses were not reported to Personnel in the June 11 memorandum, has your review of this disciplinary action determined why Mr. H~allett, as reflected in the August 11 memorandum, recommended that the Personnel Division consider disciplinary action against Mr. Coplin's subordinates?
H as your review of this disciplinary action determined that Mr. Hallett acted fairly- and properly when he was an instrumental figure in lowering Mr. Coplin's emnployee appraisal before Mr. Thackston had sustained the charge of "Neglect of Dii)ty-Failure to Follow Instructions?"
My review-of Mr. Thackston's decision to sustain the charges, the Grievance Examiner's findings and recommended decision, and Mr. Wilkinson's, the then Administrator of AMS review of the record-indicates, whether deliberate or otherwise, that the evidence contained in the sworn statements of the subcommittee staff, the Auigust 11 memorandum, and the personnel checklist were not considered by any of these three officials in reaching their respective decisions.
Does your review of the records indicate anything to the contrary?
Has your review of this disciplinary action determined that the facts cited above should not be evaluated inii reviewing whether the personnel action taken against Mr. Coplin was appropriate?
If you do not consider that these facts should be evaluated in reviewing tihe personnel action, please explain why.
To summarize, Mr. Secretary, permit me to recount briefly how Mr. Coplin's situation has presented itself to me.
At the subcommittee's request, Mr. Coplin appeared at subcommittee ofices on July- 23, 1975. His superior Mr. Hallett accompanied him and resisted our talking to -Mr. Coplin privately. I had to get on the phone and ask Mr. Hallett to leave.
Later, my staff told me that Mr. Hallett appeared perturbed after his conversation with me and upon departing commented to the effect that the incident would reflect adversely on Mr. Coplin's career.
In November, I am told that disciplinary action, five days suspension without pay, has been taken against Mr. Coplin. The action is over a three cent difference in the submission of vouchers for auto expenses.
My staff looks into the matter and finds that Mr. Coplin says he had approval from Mr. Hallett to do that for which he was penalized. Moreover, Mr. Coplin had returned the money to which he was apparently not entitled. Either Mr. Hallett or Mr. Coplin are right as to whether Hallett gave his approval. Despite the conflict the charges were sustained by an acting personnel director.
On November 4, I asked then Secretary Butz, to provide me with an explanation. Shortly thereafter, Assistant Secretary Feltner and Mr. Wilkinson came to speak to me. They emphasized to me that the personnel action was started by a June 11 memorandum, long before Mr. Coplin's July 23 appearance.
Neither gentleman mentioned any events after July 24 that advanced the personnel action. They assured me that Mr. Coplin had appeal rights, and Mr. Wilkinson told me that he would give the matter close attention. I decided to wait and see what the review process would bring.
After a grievance examiner and Mr. Wilkinson reviewed the case and sustained the charges in April of 1976 my staff began to investigate the matter further. Based on the findings I decided to hold a hearing in September of 1976.
Despite repeated assertions by representatives of your office that the disciplinary action could not be related to Mr. Coplin's visit on July 23 because of the June 11 memorandum, I find Mr. Hallett met with the Personnel Division August 7, to specifically discuss Mr. Coplin and the charges.
This is 15 days after I asked him to leave and after he is heard to make a comment on how his visit will affect Mr. Coplin's career by my staff. In addition, I find Mr. Hallett recommended that disciplinary action be taken against MAr. Coplin's subordinates, who later corroborate Mr. Coplin's account of what happened in a January 14 telephone call that is in dispute.
I find that an internal personnel checklist supports the idea that Mr. Hallett's August 7 actions were influential in advancing the personnel action.
I find that in September Mr. Hallett lowers Mr. Coplin's job appraisal before the disciplinary action is sustained.
In public hearings, I ask Mr. Hallett about the comment I was told he made in subcommittee offices concerning Mr. Coplin's career. He denies any such comment categorically. I find that Mr. Hallett not only disputes with Mr. Coplin and his staff Pbout what he said, but that he disputes with my staff director and two other staff members who witnessed the discussion about what he said.
These points were enough to give me a great concern. But there was more. I asked Mr. John Tromer, a former Personnel Director of the Agricultural Marketing Service, to impartially review the disciplinary action and Mr. Thackston's decision. I believed Mr. Tromer to be a fair and legitimate expert witness.
In hearings, I ask both gentlemen similar questions. Mr. Thackston says Mr. Coplin's intent was not an important consideration. Mr. Tromer says intent should be an important consideration. Mr. Thackston says while he cannot determine who was telling the truth about the January 14 telephone call, he sustained the action. Mr Tromer says based on the dispute over the telephone conversation, he would have dismissed the case.
Quite clearly, the judgments of these two gentlemen are diametrically opposed. My own common sense tells me that intent is an important consideration in this kind of matter. My own common sense tells me that whether Mr. IHallett approved of the action is an important question.
Perhaps you can appreciate why I remain tremendously concerned that retaliatory action was taken against Mr. Coplin. As a member of the United States
Congress, I would be remiss if I did not take steps to ensure that this question be answered, given the appearance presented by the facts surrounding the personnel action against Mr. Coplin.
I know that the events leading to this letter occurred largely before you became Secretary of Agriculture. I urge you to carefully review the facts surrounding this personnel action. Whether Mr. Coplin's appearance before my subcommittee had any relationship to the personnel action against him is a serious question with criminal implications.
Even if the existence of such a relationship is inconclusive, the different judgments of Mr. Thackston and Mr. Tromer lead me to seriously question the intrinsic fairness and merit of the personnel action. I urge you to closely examine these differing judgements.
I would appreciate your personal attention to this matter. I look forward to your responses to my questions.
With best regards, I am
Sincerely, LAWTON CHILES. Chairman.