affected by orders of the Secretary of Agriculture in increasing the price of milk, it would be necessary to revise subsection (b) of the bill to provide for price adjustments on the basis of actions of the Secretary of Agriculture increasing the price of milk without limiting such action to increases in producer prices for fluid milk for beverage purposes. Regulations would provide that contractors seeking relief under such a provision would be required to show how these actions of the Secretary of Agriculture affected the price they were required to pay.

There is enclosed for your consideration a draft of a bill incorporating the changes recommended above. In addition, a clarifying change is recommended in subsection (b)(3), line 22, page 2 of the bill. The revised language in the enclosed draft makes clear that an adjustment in the contract price under the bill is not authorized for loss of anticipated profits. Also, the new section should be numbered 2389 instead of 2390 since the last section in chapter 141, title 10, is now numbered 2388.

The cost to the Department of Defense of the price adjustments authorized by the bill cannot be ascertained at this time.

The Bureau of the Budget advises that while there is no objection to the submission of this report, the Bureau is seriously concerned about the enactment of legislation to pay for losses incurred in the performance of a fixed-price Government contract. In general, the Bureau of the Budget thinks the reasons cited earlier in the report against inclusion of escalation clauses in future contracts are equally valid arguments against provision of relief for losses sustained under past contracts. In particular, it appears to the Bureau that long-term suppliers of milk under the contracts covered by the bill assumed the risk of rising milk prices during the contract period; signs of rising prices evidently appeared in the latter part of 1965, and the actions of the Secretary of Agriculture not only tended to follow rather than force price rise but also were only one element in the extremely complex play of market forces determining the price of milk. To grant relief to the suppliers covered by this bill could easily lead, in the opinion of the Bureau, to demands for similar relief by suppliers of milk to other Federal and to non-Federal consumers as well as by all suppliers of commodities and services who assert their losses are due to official actions of the Federal Government.

Sincerely yours,

CHANGES IN EXISTING LA W

PAUL C. WARNKE.

In compliance with subsection 4 of rule XXIX of the Standing Rules of the Senate, changes in existing law made by the bill are shown as follows:

Chapter 141 of title 10, United States Code, is amended by inserting at the end thereof the following new section:

"§ 2389. Contracts for the procurement of milk; price adjustment "Under regulations prescribed by the Secretary of Defense, any contract for the procurement of fluid milk for beverage purposes which was being performed on or after March 1, 1966, may be amended to provide a price adjustment for losses incurred by a contractor because of increased prices paid to the producers for such milk as

a result of action by the Secretary of Agriculture on or after March 1, 1966, increasing the price of milk. A price adjustment shall not be made unless it has been determined by the Department that"(1) such amount is not included in the contract price;

"(2) the contract does not otherwise contain a provision providing for an adjustment in price; and

(3) the contractor will suffer a loss, not merely a diminution of anticipated profit, under the contract because of such increases in producer prices."; and

(2) By inserting the following new item in the analysis thereof: 2389. Contracts for the procurement of milk; price adjustment.'

Mr. SYMINGTON, from the Committee on Armed Services, submitted the following

REPORT

[To accompany H. R. 16646]

The Committee on Armed Services, to which was referred the bill (H.R. 16646) to amend title 10, United States Code, to authorize the award of exemplary rehabilitation certificates to certain individuals after considering their character and conduct in civilian life after discharge or dismissal from the Armed Forces, and for other purposes, having considered the same, reports favorably thereon with an amendment and recommends that the bill, as amended, do pass.

AMENDMENT

The amendment is as follows:

On page 2, line 8, after the word "honorable", insert ", or who received a general discharge,”.

EXPLANATION OF THE AMENDMENT

The committee amendment permits a person who has received a general discharge to apply for an exemplary rehabilitation certificate. A general discharge is considered a discharge under honorable conditions and, ordinarily a person who had received a general discharge would have no need for an exemplary rehabilitation certificate. There may be special circumstances, however, in which a person who received a general discharge would find it useful to establish that his postservice conduct had been exemplary.

PURPOSE

This bill, as amended, would authorize the Secretary of Labor to issue an "exemplary rehabilitation certificate" to a person discharged

or dismissed from an Armed Force under conditions other than honorable or to a person who had received a general discharge if the person establishes that he has rehabilitated himself, that his character is good, and that his conduct since release from the armed services has been good for at least 3 years.

BACKGROUND

For several years, Members of Congress have been concerned with finding a method for mitigating the lasting, harmful effects of military discharges of a less than honorable type, without impairing military discipline and without detracting from the value of a discharge under honorable conditions. There is general recognition that the less than honorable discharge is a severe handicap in securing employment and that many persons receive such discharges as a result of misconduct when they were young and not sufficiently aware of the serious consequences of their actions.

H.R. 16646 has evolved through several attempted legislative solutions for this problem. Like its precursors, this bill would permit a person discharged with other than an honorable discharge to establish that his postservice conduct and reputation have been good and to receive a certificate to this effect; unlike the preceding bills, H.R. 16646 authorizes the issuance of such a certificate by an agency of Government other than the Department of Defense, which considers that evaluation of performance in civilian life is not an appropriate function for it.

The certificate that could be awarded by the Secretary of Labor under the authority of this bill would not entitle a recipient to any benefits unless he would be entitled to those benefits under his original discharge or dismissal. The Secretary of Labor, however, would be authorized to extend special counseling and job development assistance to persons who receive exemplary rehabilitation certificates.

Under the bill at least 3 years must elapse between the military discharge and the date the person applies to the Secretary of Labor for a certificate.

The Secretary must consider relevant evidence that would establish to his satisfaction that (a) the person has rehabilitated himself, (b) his character is good, and (c) his conduct, activities, and habits since he was discharged have been exemplary. Such evidence could be written or oral and it could include such things as notarized statements from law enforcement officers, employers, and persons in a position to judge the applicant's reputation and conduct.

COST

The Department of Labor informed the committee that the increased cost that would result from this bill would be negligible.

DEPARTMENTAL RECOMMENDATION

The letter from the Acting General Counsel of the Department of Defense that is printed below and made a part of this report shows that the Department of Defense and the Bureau of the Budget have no objection to the bill. This letter addresses itself to H.R. 15053.