Mr. WYATT. That is quite right.

Mr. CANNON. Are you certain that you have made a study of this and that that study justifies this increased cost on the later basis? Mr. KLUTZNICK. Mr. Chairman, I am as much concerned with the item of cost as you have expressed yourself to be.

Offhand, it looks like an awful lot of money for what one gets. With respect to the cost, we are watchful always of that situation. What are the problems? We made a study, in direct answer to your question. As we have said to this committee on several occasions the FPHA the last 9 or 10 months of the war was moving more housing than anyone else ever had done. First with respect to material supply, we actually went through jobs in field tests to determine what would be a fair cost of doing them.

We are not miracle workers; we have been accused of being extravagant on many occasions, but we have watched the costs that exist in the field, and they are terrifically high. We have to buy materials at the price materials are currently selling for and to keep track of everything in the interior, from the floor to the roof. We have to supplement 25 to 40 percent of the materials on everything which has to be moved. The site has to be cleared. We are paying what anybody else would pay for labor and equipment.

It is our feeling that, as extravagant as we may appear to be, this is the meanest and the dirtiest program we have ever undertaken.

It means taking old stuff with considerable wear and tear at its present location and to provide as many reasonably decent houses as possible.

We would like to say that we could do it for less, but I think we would be less than honest to you if we said that.

Let us take an example, as here we are as vulnerable as we can be. I do not like to say this, during the later stages of the war we had a number of bids, and we found that the cost would run anywhere from 25 to 30 percent above the estimates that were given you because the contractor is uncertain about labor, materials, and distribution. So we went to what is to my mind a very serious thing, that is to cost-plus-fixed-fee contracts, which we believe is the best way to get us a saving of 25 or 30 percent.

To build a new temporary two-bedroom house today of the kind desired will cost from $4,500 to $5,000, and then be junked.

If the rest of Mr. Wyatt's program should succeed quickly with prices sufficiently down we may be able to effect some substantial economies.

We have a list of these items with the cost, and I will be glad to file a list with that itemization.

(The information is as follows:)

Itemization of cost of moving and reerecting federally-owned structures

Mr. CANNON. I will say that this situation is a challenge to the administrative ability of your unit. You will be of service to the veterans, in proportion as you are able to economize sufficiently to provide the required number of units out of the amount available, and I hope you will continue with the view to producing as many units as possible out of the amount you have, and cut as many coats as you can out of the cloth available.

REIMBURSEMENTS BY BENEFICIARIES FINANCIALLY ABLE TO PAY

When this matter first came up the idea was that the beneficiaries should bear the cost where they are in a position to do so.

One day when this entire committee and the committee on the Senate side were in conference, without any notice at all, an amendment was tacked on to the legislative bill before the House which shifted the cost to the Government, except for sites, and provided for reimbursement of advances that had already been made. In other words, there were a lot of dead horses that had to be paid for before you could start on this program.

Can you give us figures by this time as to how much this reimbursement would be?

Mr. KLUTZNICK. It would amount to around $10,000,000, or between $10,000,000 and $11,000,000.

Mr. CANNON. That should have gone into new construction.
Mr. KLUTZNICK. We had no choice but to follow the act.

NUMBER OF APPLICATIONS FOR HOUSING

Mr. CANNON. You will be able, with this additional amount requested in this estimate, to provide for 100,000 more units. That will give you a total, according to our last computation, of 202,350 units, whereas you have requests now, from the data you submit for.382,988 units.

Mr. WYATT. It is 382,988; the number has been increased.

Mr. CANNON. Has this number been screened to determine eligibility and merit?

Mr. KLUTZNICK. Yes, sir; not that particular number itself, but an earlier list of applications, to determine whether we would approve the applications.

We last screened the applications on February 11. At that time we had a total of 177,000 units requested from educational institutions in excess of allocations some of which have since been withdrawn. Of this number, it was our openion that the need had not been established to the tune of 2,660 units, that the need had been overstated by 23,743 units, and that the quota limitation affected 147,000 units. If we had not operated under the quotas adopted by the Administrator's office we would have been compelled to allot an additional 147,296 units for educational institutions alone. On the same date as to local governmental bodies, we would have approved 73,474 and rejected 12,270 because of an overstated need. In other words, the figures on applications are inflated; not in the sense of not being actual appliations, but they do not represent approved applications. They represent needs far in excess of any 200,000-unit approved applications. Mr. CANNON. You are in a position to give us, when your testimony is returned to you for revision, the latest figures?

Mr. KLUTZNICK. The screening of those February 21 figures might take a week, because they are stated in the field. The February 21 figure far exceeds the 200,000 requested, which we are in a position to give you immediately.

Mr. CANNON. You are exercising care to avoid discrimination in allocations, I take it?

Mr. KLUTZNICK. The rule that was established was that the need was so widespread that locality quotas should be in accordance with locality population, and distribution made as related to a percentage of the population; and that educational need should be related to the number of veterans actually enrolled as of December 1. That was the last date that we accepted because the enrollment then so far exceeded what we could supply.

We have had very little criticism when the method of apportionment was made clear.

The first 100,000 units will be distributed among 1,100 institutions and units. When we consider cost that is a very important factor.

The median average project is one of 38 units. That is important to cost; the overhead incidental to such a project is about as great as for one with several times as many units. That factor's impact on the program may be appraised when it is put down that of the 1,100 projects, 70 percent are of 50 units or less.

From the point of view of the job we have never had anything like it, and it is a challenge.

AVAILABILITY OF HOUSING UNITS FOR RECONVERSION

Mr. CANNON. Will the construction of the 200,000 units exhaust all of the structures available for reconversion?

Mr. KLUTZNICK. During 1946 it would probably leave a surplus of another 50,000 or 60,000 units for Army and Navy veterans.

Mr. CANNON. There will be after that time a surplus?

Mr. KLUTZNICK. Yes. As a matter of fact we are now making some of those available to cities which want to finance construction in excess of their present quotas.

CURRENT AUTHORITY FOR APPROPRIATION

Mr. CANNON. This estimate antedates the expected enactment of the Senate bill, S. 1821, which provided for certain administrative expenses provided for in the legislation.

That is the bill which passed the House on March 7. In other words, it was to finance expenses with a view of getting under way more quickly, assuming the eventual enactment of the bill, H. R. 4761. As I recall, the legislation in H. R. 4671 would not be effective after June 30, 1947, and perhaps earlier.

Mr. WYATT. That is H. R. 4761?

Mr. CANNON. That is the bill which passed the House.
Mr. WYATT. The Patman bill?

Mr. CANNON. Yes.

Mr. WYATT. The requested appropriation before the committee this morning contemplates only existing legislation actually in effect, plus Senate bill 1821, which is the Meade bill which passed the Senate A similar bill was approved by the House committee, and is before the

House for a vote this afternoon, which includes authorization of an additional $250,000,000 for re-use of another 100,000 units. This estimate does not contemplate the provisions in the Patman bill.

Mr. CANNON. This program we are considering should be consummated in the next few months, and the quicker that is done the more effective it will be, because if we need it, we need it now.

Why do you ask that the appropriation remain available until expended?

Mr. WYATT. We are thinking there, in connection with the emergency housing program being centralized in the Administrator's and Expediter's office, of carrying it out through several other agencies of the Government. If the authority is centralized it is important to have some flexibility and being able to reimburse other agencies, for the extended functions, which it is necessary for them to take on to make the total program succeed. In addition, funds will be needed to cover bills for final work in completing this housing.

ADMINISTRATIVE EXPENSES, NATIONAL HOUSING AGENCY

Mr. CANNON. Turning to the administrative expense phase of this proposal for which you have direct responsibility, it appears you are asking for $1,232,000 for the balance of the fiscal year?

Mr. WYATT. That is correct.

Mr. CANNON. And it may be that some part of that amount is for the National Housing Agency in this enlarged program.

Mr. WYATT. That is right.

Mr. CANNON. What is the division?

Mr. WYATT. In the $1,232,000 we have made no division because we are working with a pooled staff.

Mr. CANNON. So you have made no provision for the NHA?

Mr. WYATT. Provision, yes; but there is no division as between the Expediter and the Administrator, and also between the Administrator's and Expediter's staff. Half of the personnel employed with these funds will be in the field.

Mr. CANNON. You have made no division of these estimates. How much has the National Housing Administration now that is available for administrative expenses which would be supplemented by this additional amount?

Mr. MOORE. What is the question, Mr. Chairman?

Mr. CANNON. How much has the NHA for administrative expenses which will be supplemented by the amount provided in this estimate?

Mr. MOORE. It is more than $2,000,000.

Mr. CANNON. How much more?

Mr. MOORE. It is $2,300,000.

Mr. WYATT. That is for the full year.

Mr. CANNON. Suppose you give us a break-down of that amount for the NHA and the additional amount in this submission, and a justification of the whole amount?

Mr. MOORE. The additional amount in this submission is $1,232,000. Mr. CANNON. What is the amount for administrative expenses? That does not seem to be here.

Mr. MOORE. For the Administrator and the Expediter it is $1,232,000 for the balance of 1946.

Mr. CANNON. On page 2 in your tabulation there is an item for an administrative expense for the balance of the fiscal year 1946 amounting to $1,232,000. You have provided for both of those units in there?

Mr. WYATT. That is for the Expediter and the Administrator.
Mr. CANNON. How is it divided?

Mr. WYATT. We have not undertaken to do that for this reason: Take myself. I am serving as Expediter and Administrator, and I am drawing one salary, but working in both capacities. Also, my own office force will be working in both offices with the same equip

ment.

Also, in the field we have seven regional administrators in seven regions, and we will enlarge that to nine regions because of the greatly enlarged activity in the country.

Also, instead of calling those representatives of the Administrator, they are now constituted as expediters in the field, and they will be handling the functions which they used to handle as representatives of the Administrator. They will be taking on additional functions necessary in coordinating the work of the several Federal agencies in the field.

By the same token, we are not setting up one staff for the Administrator and a separate staff for the Expediter. We are not doing that because every employee will be doing a certain percentage of one and a certain percentage of the other. Some of them will be exclusively Administrator's people.

BREAK-DOWN OF ADMINISTRATIVE EXPENSES

Mr. CANNON. Suppose you give us now, or submit, a break-down of this combined amount. You have $1,232,000 in the estimate, and added to that you will have $2,300,000 more for the full year for the National Housing Administrator.

In connection with this, Mr. Wyatt, do you have an analysis of the changes made in this material which we can examine?

Mr. WYATT. Of the $1,232,000?

Mr. CANNON. What is left of it. That $1,232,000 will be divided into these two portions, but you do not seem to be able to tell us the exact amount allotted to each.

Mr. WYATT. We will not be breaking it down between the two because we will not be able to divide the two functions. If we divided the two functions we would have a separate legal staff, and we are not doing that. We are having a legal staff for the Office of the Administrator and having those people handle it in one office.

Mr. CANNON. So that this committee can have a definite idea of what is proposed to be done with this money, suppose you give us as close an analysis and as detailed a break-down as you can. Mr. WYATT. We will be delighted to do that.

I think this would be the type of break-down that the chairman has requested.

Since we are not dividing it as between the two separate functions or as between the two agencies, we will bring back to you a breakdown of the personnel now employed in the Agency, what we contemplate for the balance of the fiscal year payable out of present authorized funds, and the requested additional amount.