Mr. WIGGLESWORTH. You spoke of the difficulty of getting a reasonable bid in Providence, but you have, as I understand, a temporary Army station at Camp Miles Standish, which is 19 miles outside of Providence.

General BRADLEY. Yes; but when you start staffing anything 19 miles outside of a town you will be in difficulties.

Mr. WIGGLESWORTH. How many beds has that temporary hospital at Camp Miles Standish?

General BRADLEY. I do not have the figure here. I came up to discuss the principle of this thing, and I do not have the detailed figures.

Mr. CANNON. In your statement you refer to a large number of projects, some of them going back to 1945, but still you come here with only two projects and on one of them only one bidder. Have you not any more information than that?

We

General BRADLEY. I have merely cited those as instances. had one bid at Hines, Ill., which was three times the estimate. There is also one at Sioux Falls. That was let before I came on the job. The estimates at Hines, Ill., were so high that they threw them all out and revised the plans and will ask for bids on the new plans. There have been several instances of that kind.

Mr. CANNON. Before the war, when we advertised for projects of this character-the construction of a large building we had many bids. Regardless of the advancing cost of construction, why should we not have as many bids as we had before, based upon current conditions? In this case you sent invitations to bid to 200 contractors, and they can make money legitimately, and you have only one bid. Certainly there is something peculiar about that.

General BRADLEY. I cannot say anything more than I have said before.

Mr. CANNON. Have you not had your staff analyze the situation which results in receiving 1 bid out of 200 invitations to bid? What is your best opinion, as man to man, of the cause of that situation? General BRADLEY. That many of these contractors are not interested in such a job at this time.

Mr. CANNON. They certainly have a right to get the business. They have all their equipment on hand; time and interest are running against them, and depreciation is going against them. It is to their interest to get contracts, and the fact that the cost of construction has increased should let them increase their bids. Why have they not bid?

General Bradley. I think it is because of the uncertainties of the situation.

Mr. CANNON. Is this the program upon which the 1947 appropriation was based, and is it still the program, or has it been modified in any way, and if so, in what respect?

General BRADLEY. You mean as to the type of hospitals?

Mr. CANNON. The entire program. We made an appropriation in the 1947 act, or the Subcommittee on Independent Offices recommended an appropriation under the 1947 act, which was passed, and I think it might be well for you to keep yourselves in touch at all times with just what the situation is.

The Independent Offices Appropriation Act for 1947 appropriates for new hospitals, $127,993,019. This was on the basis of an esti

mate submitted to the committee at that time. It also appropriates for additions to existing and authorized hospitals $5,499,176, and for one project for conversion it appropriates $711,215, or a total of $134,203,410; less, resulting from changes in the 1946 program, causing reductions and additions, making a net reduction of $6,534,694, which left as a total in round figures, $127,668,000. To that was added an amount for major reconditioning, replacement and construction of non-bed-producing projects in the amount of $19,774,500, which made our appropriation for this purpose in the Independent Appropriation Act of 1947 amount to $147,442,500.

That is in conformity with the program which came to us, and the idea was that the estimates were adequate to do the building contemplated, but it seems that amount is now inadequate by practically 100 percent. In other words, that the cost less than a year after the estimates were made, has doubled.

Would you say that the trend is still upward, General?

General BRADLEY. I think they are going up. There has been no change in the program. That is still our plan to construct those particular hospitals.

Mr. CANNON. And that plan has not been modified in any way? General BRADLEY. NO.

Mr. CANNON. And the cost you now get is exactly on the basis of the costs for which estimates were originally made? General BRADLEY. That is right.

Mr. CANNON. Your difficulty here is not caused by any modification of your plans as presented to the Independent Offices Subcommittee, but it is occasioned entirely by increased costs to accomplish the same work? Selangeon odi

General BRADLEY. Yes.

Mr. CANNON. You say you have not analyzed it sufficiently so that you can tell us why all these contractors whose business it is to construct, and whose profits depend upon keeping their men busy and their equipment employed, do not bid. What do you really think is the reason they are not bidding? lf en ons eieos out vid General BRADLEY. I think it is because of the unstable condition in the labor market, the cost of material, and the availability of material. no doj uskomag eldi co We can conduct a survey on that, if you like, and send out a questionnaire. of late ein ban bas stoomrend Mr. CANNON. I am surprised that you have hot done that heretofore, because that is the basis of the whole matter. Of course, what we would like to know now is this: If you waited a spell, say not more than 6 months, and the situation settled sufficiently, would you have more bidders? Of course, we know that things now are in an unsatisfactory and unstable condition, but we know that things will settle materially in the next 6 months. If we waited that long would that materially interfere with your hospitalization program?

General BRADLEY. Yes; I think it would. As you know, we have been severely criticized for not having a sufficient number of beds to take care of veterans.

Mr. CANNON. There are no more veterans now entitled to hospitalization in veterans' hospitals, are there?

General BRADLEY. At the end of February there were 21,000 veterans awaiting hospitalization who had requested it.

Mr. CANNON. And their applications had been processed and you had found they were entitled to and should have had hospitalization? General BRADLEY. That is right.

Mr. CANNON. Is that number increasing or decreasing?

General BRADLEY. It has been increasing each month. We have about 7,000 more each month than we had the month before.

Mr. CANNON. Have you made proper efforts to secure temporary accommodations for them?

General BRADLEY. Yes; we are trying to contract with civilian hospitals to take them in, where they are service-connected.

Mr. CANNON. What about the Army and Navy hospitals?

General BRADLEY. We have asked them to give us as many beds as possible. The Army has promised to give us 5,900 and the Navy 9,000 by September.

Mr. TABER. They must be giving you more than that now, are they not?

General BRADLEY. The total is about 7,700 at the present time. Mr. TABER. Out of the two services?

General BRADLEY. Yes.

Mr. CANNON. In your opinion, then, unless a contract is let at once, regardless of the cost of construction, men entitled to hospitalization will be denied hospitalization?

General BRADLEY. That is right. Of course, the number requesting hospitalization will increase because there are so many veterans out of service.

Of the 21,000, only about 600 are service-connected cases, and the others, the non-service-connected cases, are beyond the capacity of the hospitals for hospitalization.

Mr. CANNON. I think, regardless of whether they are serviceconnected or non-service connected, they should be hospitalized if they need it.

Mr. O'NEAL. General, have you a staff down there that is instructed, or has the experience, to properly analyze the present situation as to why the costs are as high as they are, or have they attempted to? I am not reflecting on their ability.

Mr. DRYDEN. We might use the Grand Junction project as a sample. On this particular job our staff reestimated the project. Then to check their estimates of costs we presented this to the Chief of Engineers and had his staff do the same job.

Mr. O'NEAL. As I understand it, that has been done. Your estimates were made as of what date?

General BRADLEY. The estimate was made in July 1945.

Mr. O'NEAL. In July 1945 there had been a tremendous increase in building in the labor costs up to that date. Your estimate was based on building costs or labor costs as of July 1945, I presume?

Mr. DRYDEN. That is right.

Mr. O'NEAL. Between that date and the present date I think 10 percent in building costs and labor costs would probably be a too liberal figure as to the amount of increase. Would you not say so? Mr. DRYDEN. I think it would be greater.

Mr. O'NEAL. It would not have to be greater between July 1945 and now, than between 1941 and now, and now they might not run 35 percent, but I think I have heard estimates on that figure; but between July 1945, when the estimates were made, and now-they

must have been based on costs as of that time, but there has not been anywhere near a 100 percent increase. It seems to me you should be able to deduce some real information on that.

Mr. DRYDEN. The base estimates in 1945 were put at 66 cents per cubic foot.

Mr. O'NEAL. What would they be today?

Mr. DRYDEN. They would be about $1.10.

Mr. O'NEAL. Do you mean that since July 1945 they have gone up that much?

Mr. DRYDEN. Those are the figures.

Mr. O'NEAL. What is the difference between July 1941 and July 1945? Based on the figures you gave, you would have the cost of labor and material going up 100 percent. It seems to me there is something wrong about those figures.

Mr. DRYDEN. I would like to quote the testimony of Col. George E. Ijams as it appears on page 206 at the hearings before the subcommittee of the Committee on Appropriations on the first deficiency appropriation bill for 1946 relative to the cost of construction as follows:

While the cost of construction work varies according to type, location, etc., the average accomplished by the Veterans' Administration throughout the several years since 1938 for contracts awarded is as follows:

1 A figure has not been indicated for 1942, since construction comparable to that now contemplated was not accomplished in sufficient volume to indicate an average cost throughout the year. This was due to War Production Board restrictions.

2 While in 1945 the average thus far is shown, bids have been received in excess of $1 per cubic foot for work similar to that anticipated in connection with the hospitals for large metropolitan areas included in this program.

A bid received by the Veterans' Administration with respect to the cost in 1945 was for a hospital at Reno, Nev., at 81 cents per cubic foot.

Mr. O'NEAL. If it is 81 cents, that is 14 percent more than 67 cents. But you have a 100-percent increase between your estimate and the bids you received. That is for materials. What about labor? That is probably about the same?

Mr. DRYDEN. It is probably about the same.

Mr. O'NEAL. The principal cost on your building is labor, primarily, and the material cost is secondary. Taking about a 14-percent increase between your estimates up to the present time, that was about 100 percent more.

It seems to me some inference should be drawn there which could be worked on.

Mr. DRYDEN. There is also the risk.

Mr. O'NEAL. This increase is not due primarily, apparently, to the increase in the cost of material and increased labor cost. It is due to other factors, and now the question is, What are those factors?

I am not a building expert, but it seems to me, so far as the experience I have had is concerned, that that is due to the fact that the bidders do not know whether they can get the material; they do not know what they are going to get, due to the OPA and other regulations:

I think the only solution is to go at the whole subject with a different approach, from a different viewpoint.

Suppose the Federal Government is calling for bids for a hospital at a particular location, and they will say, "We will guarantee you a continuity of material and delivery." Then, based upon that, you will have bidders willing to take a chance. They do not want to deal with OPA and have the uncertainty of production. It is the uncertainty of business, not being able to handle those things with any degree of certainty and particularly so in the matter of costs, because you need to know whether the cost is going up—it is that uncertainty that makes the situation difficult.

If you have some conference with the price-making authorities and analyze business conditions, then you can be in a better position to let bids.

Mr. DRYDEN. I think that is a very timely suggestion. We have prepared in the last week what we call an escalator clause in each contract which would give protection if the price of labor went down. Mr. O'NEAL. With the same sort of a guaranty if the price went up, and providing for continuity of flow.

They will not take a chance on a contract of any appreciable size and take all of the hazards. It will probably mean bankruptcy for some of them. Nobody likes to do that sort of thing or be in that sort of a condition, but under certain conditions it is the only way a contract can be handled. People will not assume all of the hazards. They are not authorized under the law to build under cost-plusfixed-fee contracts, but have they considered doing it? Mr. DRYDEN. We have thought about that.

Mr. O'NEAL. According to Mr. Dryden's statement, between July 1945 and the present date, there has only been a 20 percent increase in cost, but the bids are 100 percent higher, and that shows definitely what it in the minds of these men who build hospitals.

I think, Mr. Chairman, an approach to this is to figure on something in a different way of doing that work providing, say, for the over-all cost plus a fixed fee or by the Government arranging for production and delivery so that a man will be protected, and in that way I think you will cut down this increase by 50 or 75 percent under what it is. today. That is just an opinion of mine which might or might not work out.

Mr. KERR. Have you acquired the sites on which to build these two hospitals?

General BRADLEY. Yes.

Mr. KERR. The title is already in the United States?

General BRADLEY. Yes; both of them are clear.

Mr. KERR. There has been a real acquisition of the sites at these two places?

Mr. DRYDEN. At Providence it was a donation to the Veterans' Administration of 40 acres.

Mr. KERR. That site cost you nothing?

Mr. DRYDEN. Yes; that is right. At Grand Junction, the property there was donated, and there are 40 acres involved.

Mr. MAHON. General Bradley, the Army engineers have estimated on the construction work under flood control and rivers and harbors. Have you made any investigation as to whether or not the increased cost which you are encountering is being encountered by other agencies in about the same proportion?