PROJECTS IN UNCOMPLETED STATUS It seems that 11 projects will remain in an incomplete status on July 1, 1946, and your proposal is to continue available approximately $2,134,235 as a reserve for contingencies and to make not more than $40,000 available for the administrative expense. Do you have funds available for all foreseeable commitments for all of these projects? Mr. HALL. Yes, sir. Mr. CANNON. How much do you have in reserve for these commitments? Mr. HALL. This $2,134,000 would be the reserve to meet such contingencies as might arise. Mr. CANNON. Does that include or exclude the reserve for contingencies? Mr. HALL. That is the reserve for contingencies. Mr. CANNON. At this stage, you could not get along with any less money? Mr. HALL. May I take just a minute to review the situation? Mr. HALL. This estimate is submitted to you at the request of the sponsors of these incompleted projects and their representatives in the Congress. When our independent offices appropriation bill was up, the question was raised by the Members of Congress as to why this item was not included at that time. We explained it was better to wait until we saw how much work had actually been completed during the fiscal year 1946 so that the estimate for 1947 would provide only for continuation of the funds that were necessary to liquidate obligations plus a reserve to meet any contingencies. When we came to you in 1945 for provision to liquidate the PWA program, there was $37,500,000 of previously appropriated funds available. The Administrator returned $9,055,000 to the Treasury and received your approval of $9,000,000 as a reserve to take care of overruns and contingencies. It is now estimated that an additional $400,000 will be returned to the Treasury this year due to reductions in allotments that will not be necessary to meet project costs. This balance of $2,134,235 is being continued merely to take care of any increases in costs on projects which are now under way. It will not be used to provide for any additional work. Mr. CANNON. Now, let us go back and have a brief review of the situation here. This is a part of your PWA program, I believe? Mr. HALL. That is right. Mr. CANNON. And when the program was closed down at the beginning of the war, there remained certain projects uncompleted, all of the money for which had been advanced, or commitments had been made, and you had the bonds of the sponsors, I believe Mr. HALL. $75,000,000 in bonds. Mr. CANNON. Now, there were many projects on which proposals had been initiated, but money had not yet been committed. As I understand it, they were washed out permanently? Mr. HALL. Anything on which there was not an actual obligation. Mr. CANNON. There is no prospect of going back to any of them? Mr. HALL. No, sir; not any. Mr. CANNON. But these were just a few where we had gone so far that nothing remained but to finish up the project? PROGRESS MADE IN CLOSING-OUT PROJECTS Mr. HALL. There were 29 projects when we took over the liquidation. We were able to close-out 8 in the fiscal year 1945, and we expect to close-out 10 more in this year. That leaves 11 to be closed out after June 30, 1946. Mr. CANNON. That is the 11 you list in here on exhibit A, is it not? Mr. HALL. That is correct. Mr. CANNON. And seven of those, you say, will be closed out during the fiscal year 1947 and 4 will remain incomplete at the end of the fiscal year 1947. There is one small project that you say may be abandoned. What is the prospect of the abandonment of that project at this time? Mr. HALL. We have taken the matter up with the sponsors of that project, to try to get them to concur in its abandonment. If they do not concur in the abandonment, then an administrative determination will have to be made whether we should cancel the obligation without their concurrence. Mr. CANNON. Can you cancel it without repudiating any agreement that you have made? Mr. HALL. No; there would be a claim against the Government for any costs incurred up to the date of cancellation. Mr. CANNON. They have not indicated what their attitude will be? Mr. HALL. Up to this date, they have wanted us to continue the availability. We hope they will simply concur in the abandonment of the project. Mr. CANNON. In case they do not, you will go ahead and let them bring their claim? Mr. HALL. That is a decision that will have to be made at that time. Mr. CANNON. What is the situation that prevents completion of these 4 in the fiscal year 1947? Mr. HALL. The amount of work to be done is greater than can be 'done with available materials and labor. Mr. CANNON. Under normal conditions you could probably complete them but the stringency in the materials and labor market will probably run them over into 1948? Mr. HALL. That is correct, yes. Mr. CANNON. Is there any objection to including exhibit C which names these projects? Mr. HALL. No, sir. Mr. CANNON. We will include that at this point. (The matter referred to is as follows:) FEDERAL WORKS AGENCY, OFFICE OF THE ADMINISTRATOR-STATUS AS, OF APRIL 1, 1946, OF PWA PROJECTS WHICH WILL NOT BE CLOSED OUT AS OF JUNE 30, 1946 Of the 29 projects which were unclosed as of June 30, 1944, it is forecast that 18 will have been closed by June 30, 1946, leaving 11 projects on which some sort of activity will remain to be done during the fiscal year 1947. The nature and extent of these activities is reflected in the following summary statement of the status of each project. PROJECTS UPON WHICH PHYSICAL WORK WILL REMAIN TO BE DONE AFTER JUNE 30, 1946 Ga. 1674-F-Water supply, McIntyre, Ga. Estimated total cost $10,909. Grant allotment $4,909 none of which has been paid. Shortly after the allotment was made in 1938, the project was suspended due to litigation over funds to be supplied by applicant. Although the ltigation has been settled, the project remained suspended due to unavailability of materials during the war. Efforts have been made during 1946 to either complete or abandon the project, but no conclusion has been reached and the final disposition may not be reached until some time in 1947. Ill. 1891-F-Subway in Chicago, Ill. The original estimated cost of this project of $57,400,000 was increased as of April 1, 1946 to $60,800,000 to provide for increased labor and material costs. Of this estimated total cost, $4,800,000 is not susceptible to Federal participation, giving a net cost for participation of $56,000,000. The revised grant allotment is is 45 percent of the net cost of $25,200,000, all of which is obligated, although $8,038,500 remains unpaid as of April 1, 1946. The project consists of two subways and appurtenances. One is in Clybourn Avenue, Division Street, and State Street, 4.9 miles long, from a connection with the North Side elevated lines near Armitage and Sheffield Avenues to a connection with the South Side elevated lines near Seventh Street. The other is in Milwaukee Avenue, Lake Street and Dearborn Street, 3.85 miles long from a connection with the Northwest elevated lines near Milwaukee and Evergreen Avenues to a loop in Congress Street near the Chicago River. The State Street subway is in operating condition. Work on the Milwaukee and Evergeeen connection was started March 26, 1946. Construction of the Dearborn Street subway will soon be under way and it will continue beyond 1947. Mont. 1167-F-Reservoir on Middle Creek, Mont. Estimated total cost of project $590,000. Grant allotment $263,025 of which $58,450 has not yet been paid. This project consists mainly of a water impounding dam for the State water conservation board. Cnostruction was well under way when the project was suspended during the war. The work entails considerable disadvantages as the site is high in the Rocky Mountains which limits the construction season to about 3 months in a year. Efforts have been made to effect a resumption of work in June 1946. If efforts are successful, the work should be completed in the summer of 1947. Nebr. 573-P-Hydroelectric power project of Platte Valley Public Power and Irrigation District, Nebraska. Estimated total cost of project $13,009,000. Loan allotment $9,207,000 of which $8,776,000 has been advanced for which bonds in the full amount have been received. Grant allotment $2,789,148 of which $234,219 has not yet been paid. In brief, the project consists of a diversion dam across the North Platte River, approximately 75 miles of canals, a storage reservoir a diversion dam across the South Platte River and a supply canal 71⁄2 miles long from the dam to connect with a supply canal to the storage reservoir, a regulating reservoir, a hydroelectric plant, substations and approximately 300 miles of transmission lines. Construction will be substantially complete by June 30, 1946, leaving only minor items, final tests, audits and settlements to be done after that date. Nebr. 665-P-F-Hydroelectric power project of Loup River Public Power District, Nebraska Estimated total cost $14,633,000. Loan allotment $10,268,000, all of which has been advanced, for which bonds in the full amount have been received. Grant allotment $4,365,000, of which $581,172 has not yet been paid. In brief, the project consists of a diversion dam in the Loup River, a canal with a regulating reservoir, low-head and high-head stations, substations, transmission lines and appurtenant structures. The work will be substantially complete by June 30, 1946, leaving only minor items, final tests, audits and settlements to be done after that date. Nebr. 3400-PP-R-Hydroelectric power project of Central Nebraska Public Power and Irrigation District, Nebraska. Estimated total cost of project $43,280,000. Loan allotment $23,856,000, all of which has been advanced, for which bonds in the full amount have been received. Grant allotment $19,115,000 of which $469,122 has not yet been paid. A reserve of $300,000 is being held to meet possible increases in cost and grant. In brief, this project consists of a storage reservoir on the North Platte River; an irrigation canal system with a diversion dam, main canal and laterals; a water supply system for power with a diversion dam, canals and regulating reservoirs; hydroelectric plants, substations, transmission lines and appurtenant structures. Work on the project has been progressing increasingly well. Replacement of riprap on the face of the dam is about 87 percent complete as of April 1, 1946, and should be completed early in fiscal year 1947. All construction should be substantially completed during 1947, leaving only minor items and final matters to be finished after June 30, 1947. Ohio 2262-F-Electric plant, Amherst, Ohio Estimated total cost, $206,000. Grant allotment, $141,800, of which $31,511 has not yet been paid. Although originally designed as a Diesel-electric plant, this project was subsequently changed to steam-electric. All work has been completed except for the switchboard and appurtenances, which have been delayed due to strikes in the plant of the manufacturer. Revised schedules now call for delivery and completion about June 30, 1946, leaving only minor items and final tests, audits and settlements to be done after that date. S. C. 4329-P-R-Hydroelectric power project of South Carolina Public Service Authority Estimated total cost $53,225,000. Loan allotment $29,274,000, of which $26,055,000 has been advanced for which bonds in the full amount have been received. Grant allotment $23,951,000, of which $3,926,687 has been paid. In brief, the project consists of dams on the Santee and Cooper Rivers and their tributaries, the Santee and Pinopolis Reservoirs, with a connecting canal, hydroelectric plant and other generating plants, transmission and distribution lines, and appurtenant structures. The project as originally contemplated is complete and in operation except for transmission lines and substations. However, additional work has been found to be necessary in eliminating floatage from the reservoirs, acquisition of easements for flowage and seepage rights, and about 12 miles of up-stream slope protection, necessitating an additional allotment of $4,000,000 in January 1946. This additional work is scheduled to be under way shortly, but will extend throughout 1947. PROJECTS WHICH WILL REMAIN UNCLOSED DUE TO LITIGATION AFTER JUNE 30, 1946 Ala. 5806-F-School building, Shelby County, Ala. Grant allotment $94,455, of which $2,515.04 has not yet been paid. Mass. 1098-R-Sewer system, Boston, Mass. Grant allotment $1,350,000, of which $89,181.13 has not yet been paid. N. C. 1301-P-Hydroelectric plant, High Point, N. C. Original estimated total cost $10,000,000 reduced to $1,837,715.16. Grant allotment reduced to $1,837,715.16, of which $54,748 has not yet been raid. Mr. TABER. How many of these projects do you expect to be completed? This Chicago job, they are not doing anything about that, are they? Mr. HALL. We now hope to have all of the remaining projects completed by July 1948. As to the Chicago subway, construction has recently been resumed, but there is so much work remaining to be done that it will take longer than this fiscal year to complete it. Mr. TABER. It will take longer than the next year? Mr. HALL. It will take longer than the fiscal year 1947 to complete it. It will run into the following fiscal year. Mr. TABER. These other projects, why are they not completed in this fiscal year? Mr. HALL. The contractors have not been able to obtain labor and materials in sufficient volume to complete them. ADMINISTRATIVE EXPENSE Mr. TABER. What have you got to do that requires $40,000 administrative expenses? Mr. HALL. I think we have that fairly well outlined on page 4 of our justification on administrative expenses. Mr. TABER. I could not see that you had made justification of it. I cannot see, frankly, why you would need that money at this time in such volume. Mr. HALL. There is $17,000,000 worth of work remaining to be done. The $40,000 for administrative expenses is less than threetenths of 1 percent of that amount. Mr. TABER. How much money have you got? Have you got that $17,000,000? Mr. HALL. Yes; indeed. We have about $20,000,000. Mr. TABER. How much did you pay out this year? Mr. CAMERON. Approximately $5,000,000 will be spent this year EFFECT OF RESCINDING THE UNOBLIGATED BALANCE Mr. TABER. Why should we not recover all of that $20,000,000, that is in the nature of obligation? Mr. HALL. If you do, the sponsors of these projects would have claims against the Government for over-runs in cost. That is a decision that you would have to make: whether you would want to continue the availability of this money to take care of increases in cost, or whether you would want to rescind it and leave it up to the sponsors to file claims against the Government on their contracts. Mr. TABER. Have there been claims against the Government out of previous contracts that have been completed in this last year? Mr. HALL. No, sir. By continuing the availability of the balances to June 30, 1946, we have had ample funds to take care of any bona fide increases in costs. Mr. TABER. How much have you had? Mr. HALL. We have made allotments during this year of $6,308,000 to take care of increased costs. Mr. TABER. In this last year? Mr. HALL. Yes, sir. Mr. TABER. Where is that shown? Mr. HALL. I think that is indicated in exhibit C. Mr. TABER. The largest part of that went to Chicago, then? Mr. HALL. No; the largest part, about $4,000,000 of that, went to the Santee-Cooper project; $2,000,000 to the Chicago subway and a smaller amount to one of the Nebraska power projects. Mr. TABER. The central Nebraska? Mr. HALL. No, sir; the Platte Valley project in Nebraska. |