Dwight D. Eisenhower photo

Special Message to the Congress on the Extension of the Renegotiation Act of 1951

March 04, 1955

To the Congress of the United States:

I recommend extension of the Renegotiation Act of 1951, as amended, to make its provisions applicable for an additional period of two years. I make this recommendation because I believe the welfare of the country requires it.

In spite of major improvements which we have achieved in our contracting and price redetermination operations, there nevertheless remains an area in which only renegotiation can be effective to assure that the United States gets what it needs for defense at fair prices. In addition, I believe that the entire period of defense expansion and rebuilding which the United States has undertaken since the beginning Of the Korean hostilities should be considered as a whole insofar as renegotiation treatment is concerned.

Continuation of the renegotiation authority is necessary for several reasons. Because of the complex nature of modern military equipment, the lack of experience in producing it and the frequent necessity for alterations during the life of a contract, it is impossible for the Government to determine, when the procurement contract is made, what constitutes a fair price and for the supplier to forecast accurately his costs. Moreover, because of limited sources of supply in many cases, there are situations in which the Government is unable to obtain the price benefits that accrue from normal competition.

Furthermore, in the interest of broadening and strengthening the mobilization base, we have encouraged the extensive use of subcontracting. Because the United States has no direct contractual relations with the subcontractors, the only protection against unreasonable prices by them is through the process of renegotiation.

All these factors become particularly important when it is recognized that expenditures by the Government during the next two calendar years will include paying the bills for the completion of the expansion of the Air Force to one-hundred and thirty seven wings. The next two years also will see an introduction into the Air Force program of the latest type of supersonic aircraft. New types of equipment also are being ordered for the Army and Navy and Marine Corps.

As a nation, we recognize that so long as defense expenditures represent more than half of the national budget, we must do everything in our power to see to it that the maximum return is received for each dollar spent. On the other hand we must also be careful not to interfere unwisely in the traditional commercial relationship between the Government and its suppliers. In extending the Renegotiation Act last year, the Congress instituted new statutory exemptions. These have lessened the burden imposed on industry by renegotiation and, more important, have concentrated renegotiation in the areas where it is most needed.

I strongly urge that the Congress take action as promptly as possible so that both Government and business will know that this important adjunct to speedy and effective defense contracting will remain available, at least until December 31, 1956.

DWIGHT D. EISENHOWER

Note: The act extending the Renegotiation Act of 1951, approved August 3, is Public Law 216, 84th Congress (69 Stat. 447).

Dwight D. Eisenhower, Special Message to the Congress on the Extension of the Renegotiation Act of 1951 Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/234030

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