NEGOTIATED CONTRACT VERSUS COMPETITIVE BIDDING

Mr. O'NEAL. General, coming back to the sort of prosaic side of this proposition, I am wondering what is the attitude of the War Department now as between the negotiated contract and competitive bidding.

I had occasion a few days ago to examine a competitive bid which had been reviewed by a very competent engineer, and he said it was necessarily $4,000,000 or $5,000,000 more on a $34,000,000 job, because of the penalties and because of the profits they put into it; that it was four or five million dollars more than it would have been by a negotiated contract and took much longer. Have the War Department and the Engineer and Quartermaster Departments any definite opinion about that?

General MOORE. As I understand it, the Chief of Engineers is endeavoring as far as possible, to let as much of this work by competitive bidding as he can. The experience so far has been very favorable. There might be some exceptions. I do not know of your

case.

As far as the time required is concerned, it often depends entirely on the situation. In some cases you can let a contract on a competitive bid and get the work started just as fast as you can through a negotiated contract.

General Somervell has had a lot of experience with both types of contract, and I would like to have him give you his opinion on the subject.

General SOMERVELL. Is this Columbus, Ind., to which you refer? Mr. O'NEAL. Yes.

General SOMERVELL. I just happen to know about that one by accident. Those bids were divided into seven groups, as I remember it, and of those all bids were reasonable except the bid for the building.

Mr. O'NEAL. But even the total of the seven bids, so this engineer said, was probably several million more than the price for which the work could have been done under a negotiated contract; at the same time, they had no chance to get a negotiated contract.

General SOMERVELL. I have the same opinion as the Chief of Engineers in that respect. He is accepting bids which he believes to be reasonable, and is throwing out the others.

Mr. O'NEAL. I eas not questioning the conduct; what I was asking and wanted to get on the record was, has the War Department settled upon the advisability of doing the one or the other from the standpoint of speed and economy?

General SOMERVELL. Yes, sir. There is no question about competitive bids being more economical.

Mr. O'NEAL. Even with the penalties attached and taking into account that the work is accomplished with due speed, will the contractor go in there and bid without taking all of that into consideration, and also his 10-percent fee or whatever is charged-with all of that taken into consideration, do you think those bids would be less than a negotiated contract?

General SOMERVELL. Up to the present they have been.

Mr. O'NEAL. So the War Department's opinion, as of today, is that competitive bidding is the better way to do it?

General SOMERVELL. Up to the present.

General MOORE. That has been based on our past experience in the last 18 months.

General SOMERVELL. I would like to go further, Mr. O'Neal, and say that where we have plans ready, competitive bidding is the best. Now you all were good enough to give us money for advance planning and, with that money, we were able to prepare plans for all of those camps which are being advertised now. In addition to that, there are a good many jobs, primarily munitions plants, the need for which sprang up ahead of the ability of the Ordnance Department to plan for them. Consequently, some of this unquestionably can be done better by fixed-fee contracts than otherwise.

Mr. O'NEAL. You have the option to do it either way you want to? General SOMERVELL. Yes, sir.

Mr. O'NEAL. And I trust public opinion is not forcing you to do something which in your judgment you do not feel is the wise way to do it.

General SOMERVELL. No. I think the present policy is considered by the War Department, by the Under-secretary's office which controls the type of contracts, to be the wise policy.

SCOPE OF AUTHORITY OF G-4; SERVICE OF SUPPLY

Mr. O'NEAL. I would like to ask you another question: How far does G-4 service supply go? We are going to have our armies in foreign fields, and how far does your authority extend-to the port, or on to where the men are?

General SOMERVELL. The Assistant Chief of Staff, G-4's, authority at the present time extends to the port where the goods are discharged. In other words, let us say we are going to discharge goods in Brisbane; we would be responsible for the movement of the goods to Brisbane. Mr. O'NEAL. Not to the American port; you mean to the foreign port?

General SOMERVELL. Yes, Brisbane. Or if we are going to send goods to Belfast, we will be responsible as far as Belfast. Then the commanding general in that theater of operations would have the responsibility from there on.

Mr. O'NEAL. But as far as your policy is concerned, you carry it all the way to the foreign port?

General SOMERVELL. Yes, sir.

(After discussion off the record:)

Mr. O'NEAL. Other than having the money expeditiously which you are asking for, is there anything up here in the way of legislation, or any bottlenecks that we might in any way cooperate with you to eliminate?

General MOORE. Only what we have here, sir.

Mr. O'NEAL. That is all you are asking us to do?

General MOORE. Yes, sir; at this time.

(After discussion off the record.)

Mr. RABAUT. General, is there any marked change in the set-up on lend-lease now, to what it was originally?

General MOORE. These funds are allocated directly to the War Department; it is not necessary for us to go to the Lend-Lease Administration to get our allocation.

Mr. RABAUT. Is there any bookkeeping kept of the lend-lease items that go to the different nations involved?

General MOORE. Yes, sir. Requisitions are submitted in detail by these nations; and when they are released, an accurate account is kept of every item, together with its cost and expense.

The CHAIRMAN. I might say, Mr. Rabaut, that General Aurand will appear for lend-lease and we will take that up at that time.

Mr. MAHON. General, I think this statement is correct but I should like for you to verify it for the record: There is nothing in this bill for new cantonments?

General MOORE. No, sir.

Mr. MAHON. Or the expansion of cantonments?

General MoORE. No.

Mr. MAHON. Or for building Air Corps schools or the expansion of Air Corps schools?

General MOORE. No, sir; that is correct.

EXPENDITURES, ALLOCATIONS, AND DELIVERIES

Mr. WIGGLESWORTH. As I understand it, General, in the last 18 months, since July 1, 1940, we have appropriated $41,800,000,000 for the Army and there is $23,000,000,000 more, roughly, here, or a total of over $64,000,000,000. In addition to that we have appropriated about $45,300,000,000 for the Navy, $4,400,000,000 for other agencies, and there is $1,500,000,000 more here for Admiral Land, making $5,900,000,000, and we have appropriated about $14,500,000,000 for lend-lease and, as I understand, there is something like $5,000,000,000 coming in in connection with this bill, making $19,500,000,000 or, if my figures are correct, an over-all total for the period of $135,500,000,000.

Now, I wonder if someone could give us, either on the record of off the record-I assume off-what percentage of the Army's share of that total, which is $41,800,000,000 to date, if my figures are correct, has actually been expended, how much has been allocated, and when you expect to receive the finished goods which that sum represents? General MOORE. Yes, sir. We will supply that; I cannot give it

now.

ABSORPTION OF PROGRAM BY INDUSTRY

Mr. WIGGLESWORTH. Secondly, you read us a paragraph from a letter from Mr. Nelson, as the head of the War Production Board, in which it was stated, I think, if I heard it correctly, it was estimated that the sum requested for the War Department could be absorbed in the time desired. I assume that means absorbed over and above taking into consideration all of these other appropriations for the Army, lend-lease, and so forth.

General MOORE. Yes, sir.

Mr. WIGGLESWORTH. What is meant by the word "absorbed"? General MOORE. Absorbed by industry.

Mr. WIGGLESWORTH. But what is meant by the word "absorbed"? Of course, you can accept orders to an indefinite extent, but what does "absorb" mean in that connection?

General MOORE. They mean they can actually produce it..

Mr. WIGGLESWORTH. That that total would actually go into the works and come out by the time desired.

General MOORE. That is his opinion, expressed in writing here.

Mr. WIGGLESWORTH. And you are sure that is what he meant when he used the word "absorbed"?

General MOORE. Yes, sir.

Mr. WIGGLESWORTH. Because I do not know whether he is coming up here. Is somebody coming up here from the War Production Board, Mr. Chairman?

The CHAIRMAN. No; Under Secretary Patterson and General Knudsen will be here.

Mr. WIGGLESWORTH. It seems to me vital from our standpoint to be advised on that point.

General MOORE. I agree with you; I think it is, too.

LEND-LEASE ALLOCATIONS

Mr. WIGGLESWORTH. Another question, either off or on the record. Is it fair to assume that about 50 percent of the total for lend-lease has gone or is going under present plans to other countries?

(Discussion off the record.)

Mr. WIGGLESWORTH. Can you furnish us, either for the record or off the record, how much of the total has in fact gone to lend-lease nations and how much has been retained for our own purposes?

General AURAND. I can furnish you the total that has gone to lend-lease to date, off the record.

DONATIONS FOR BOMBER TO HELP GENERAL MACARTHUR

Did the War Department have anything to do with this recent petition that has been going around to raise funds for a bomber to help General MacArthur?

General MOORE. No, sir.

Mr. WIGGLESWORTH. That was not done with your recommendation or approval?

General MOORE. No, sir. If we could get bombers to him we would send him plenty.

Mr. WIGGLESWORTH. I am glad to hear that. That is all.

Mr. WOODRUM. The general statement was made in the press, I am confident, that that program was with the approval of the Army Air Force. I think you have a letter there from somebody; you have a letter there from General Arnold, if I am not mistaken?

General MOORE. I did not understand the question that way. It might have been with our consent, but we did not initiate it. We might have said it was all right, if they wanted to do it.

Mr. WIGGLESWORTH. My question was, Was it with your recommendation or approval?

General MOORE. I think it was with our approval.

Mr. CASE. Was there not in that same press story the statement that this did not mean necessarily that a particular bomber would be shipped to General MacArthur, but they would buy a bomber and whatever would be shipped would be out of the stock of the War Department?

Mr. WOODRUM. That is right.

Mr. WIGGLESWORTH. I just want to say I felt sure if we had a bomber and could get it there, the War Department would get it there. General MOORE. We would have had a lot of them there by this time, if we could get them there.

Mr. WIGGLESWORTH. I am, personally getting weary of seeing the public misled or deceived, if you will, by what seem to me unjustified representations. If you needed a bomber, you could get it up here; you do not have to go out and raise funds from the poor people in the City of Washington for that purpose.

General MoORE. No.

REDUCTIONS EFFECTED BY BUDGET BUREAU IN ESTIMATES

(See p. 14)

Mr. POWERS. General Moore, in response to a question that I propounded a few moments ago, about the Budget and the cuts that the War Department had taken from the Budget, you responded that until 18 months ago that was a fact. Now, I would like to have a table starting with and including the fiscal year 1934 and ending with and including the fiscal year 1941 of all War Department requests to the Budget, giving merely the totals, and what the Budget allowed and sent to us in the form of a fiscal year War Department appropriation bill.

Mr. STARNES. Let that go back to 1921, Mr. Chairman.

The CHAIRMAN. Without objection, the data will be submitted from 1921 on.

Mr. POWERS. From 1921 to 1941.

(After discussion off the record:)

The CHAIRMAN. The tabulation will be supplied for the use of the committee and not for publication.

INTERCHANGE OF APPROPRIATIONS

(See pp. 8, 11, 13, 23)

Mr. ENGEL. Coming back to this question of interchange of funds within the Engineer Corps and the Quartermaster Corps, do you expect to interchange funds-one appropriation, of course, in the field; that is obvious

General MoORE. Yes.

Mr. ENGEL. And in this country, too?

General MoORE. Yes.

Mr. ENGEL. Now, if that authority is given you, we will get a statement showing the complete picture of just what the money was spent for after it is spent-just as complete as we would before; is that right?

General MOORE. Yes, sir.

Mr. ENGEL. In other words, when the thing is all over, we could point to it and say, "We spent so much"-I mean within reason"so much for this, so much for that, and so much for the other"? General MOORE. Yes, sir.

Mr. ENGEL. I realize, of course, that when you get over into the theater of operations you cannot account.