Statement by the President Announcing His Intention To Establish the Defense Materials Procurement Agency.

THE FEDERAL Government's programs for purchasing and increasing the supply of critical and strategic materials are vital to the security of this Nation. It is essential that we have ample supplies of basic and rare materials if we are to fulfill our mobilization goals during the coming months and if we are to maintain the expanding national economy which gives us one of the necessary elements of strength in international affairs.

I have decided, therefore, that we must give special attention to our organization for assuring the continued supply of critical and strategic materials. Accordingly, I am creating, under the authority of the newly extended Defense Production Act, a new independent agency whose sole job will be to procure and to increase the supply of critical and strategic materials at home and abroad.

These new organizational arrangements are being made upon the recommendation of the Director of Defense Mobilization, the Secretary of the Interior, and the Director of the Budget, with the concurrence of the Administrator of General Services, the Economic Cooperation Administrator, and other interested officials of the Government. I am confident that they will provide the Government with better machinery for continuing the vital functions of maintaining an ample supply of critical and strategic materials for our economy.

This new agency will be called the Defense Materials Procurement Agency. It will be headed by an Administrator to be appointed by me with the advice and consent of the Senate. I expect to nominate Mr. Jess Larson, who will be relieved of his present duties as General Services Administrator, to be the Administrator of the new agency. He will administer the Defense Materials Procurement Agency under the direction, control, and coordination of the Director of Defense Mobilization. The reorganization will be effected as soon as the necessary orders can be arranged by the Director of the Bureau of the Budget.

The various procurement and development functions presently vested in the General Services Administration, the Department of the Interior, the Economic Cooperation Administration, and the Defense Production Administration will be transferred to the Defense Materials Procurement Agency. Specifically, the following functions will be transferred and consolidated in the Defense Materials Procurement Agency:

From the Defense Minerals Administration in the Department of the Interior:

Responsibility for materials supply expansion, including development of supply expansion programs;

Responsibility for recommending tax amortization for materials expansion actions;

Responsibility for certifying Defense Production Administration loans to the Reconstruction Finance Corporation for materials expansion actions.

From the General Services Administration: Responsibility for materials procurement under the Defense Production Act.

By delegation from the Economic Cooperation Administration:

Responsibility for serving as the agency to perform Economic Cooperation Administration materials procurement actions.

Under the planned arrangements, the Defense Materials Procurement Agency will become the operating agency for procuring and increasing the supply of critical and strategic materials both domestically and abroad. The Defense Production Administrator will continue to exercise his responsibilities concerning the development of materials requirements and will certify to the Defense Materials Procurement Agency the materials needed in the economy. The new agency will undertake both the necessary spot procurement and the development and execution of materials expansion programs.

Under the new arrangements there will be retained in the Department of the Interior-in the metals and minerals field--the regular statutory responsibilities of the Bureau of Mines and the Geological Survey, expanded to provide additional services required by the emergency programs. Also, the Department of the Interior will continue to administer the domestic exploration loans program authorized by the Defense Production Act and will carry on the priorities and allocations functions with respect to metals and minerals under that act.

The General Services Administration will continue its present responsibilities for stockpile procurement. As a rule, however, the General Services Administration will purchase stockpile materials from the Defense Materials Procurement Agency, which will act as the sole Government procuring authority for nonagricultural materials. The present arrangements for developing stockpile requirements will remain unchanged, and the General Services Administration will continue as the financial and custodial agency for the stockpile.

In providing a new agency for administering a more unified program for procuring and increasing the supply of critical and strategic materials, I shall expect that it will utilize to the maximum extent the resources of all agencies in the conduct of scheduled procurement and development projects.