The addition to the $300 million program is indicated by that bracketing showing $421 million. It comes out of the two items: fiscal year 1953 appropriation and authorization, and a contemplated 1953 supplemental.

You will notice the authorization the Congress has given for this project exclusive of the special features totals $398,990,000, of which only $300 million is properly the original program. Of course, as you know, the original program was adjusted to stay within the $300 million figure.

Now, compared with the authorization, Congress has appropriated funds up to the present time of $333,667,000. Of that amount there has been provided to the Corps of Engineers, $288,280,000. There is pending at the present time those funds which are indicated in the last column, $45,387,000. That sum, which is for the 1953 program properly, has to pass through several levels of clearance; of the Office, Secretary of Defense; the Bureau of the Budget; and I understand several committees of the Congress; before it can be released to us and put to work.

So the program as authorized by Congress is truly only $398 million, rather than the $421 million. The $421 million, you will notice by the note, would have to come from a supplemental appropriation. I think it would also include an additional authorization, as we understand it.

Mr. DAVIS. Well, is this arbitrary factor of point 7 and point 8 which is referred to on this sheet you handed us at all realistic?

General HARDIN. I understand that has no reference to the anticipated cost. It was merely a means of allowing the program to proceed with the moneys which Congress has appropriated and which have been authorized.

Mr. DAVIS. But it hardly could be considered a complete project without that additional $22%1⁄2 million, could it?

I

General HARDIN. Unless the costs are materially different. understand that there was the thought that with better operations, more subcontracting, and improvement all around, that experience would possibly provide, you might be able to build this facility for the $398 million rather than the $421 million.

Mr. DONNELLY. May this tabulation be inserted in the record at this point?

Mr. RILEY. Without objection, it will be inserted in the record. (The information is as follows:)

Program analysis, French Morocco, excludes special programs (Globecom, A. C. & W.,

etc.)

The $300 million program consists of the fiscal year 1951, 1952, and 1952 carryover programs.

The $421 million program consisting of the above programs plus the fiscal year 1953 and 1953 first supplemental, has been reduced to the present total of $398 million by the application by USAF of arbitrary factors of 0.7 and 0.8 to the various line items of the 1953 program.

The $2,890,000 recently received is included in above totals and covers warehousing and supply buildings at Nouasseur and Sidi Slimane.

Mr. RILEY. It is too early yet, General Hardin, to know whether or not you can build the facilities for the $398 million? General HARDIN. Yes, sir; I think it is too early. Mr. RILEY. That is just a hopeful situation.

General HARDIN. As a matter of fact, Mr. Chairman, we will not know what we can do until we get these two new sites and have detailed plans prepared for them. If the two sites we are now contemplating building upon do not materialize and two other sites may be substituted for them, our figures necessarily will be greatly influenced by whatever we are required to do.

PROBLEM OF REAL PROPERTY RIGHTS AT EL DJEMA SAHIM AND BOULHAUT

Mr. RILEY. Both of these new sites still are under negotiation? General HARDIN. Well, they are not under negotiation so much as they are under the process of having a right of entry given to us to proceed with the work.

In one, at Boulhaut, the problem there is the part that the United States will do and the part which the French will do with regard to certain access roads and other matters, such as relocation of facilities, which was their responsibility. That matter has not yet been cleared up.

At the El Djema Sahim site there is the matter of a real estate problem, in which the original land which had been agreed upon under the negotiations, which were considered complete, is inadequate to provide the facility which is planned for that base. They have to seek more land. General Walsh, I believe, could bring us up to date on the exact status of that.

General WALSH. Your statement is essentially correct.

In February of this year we felt that we did have the Boulhaut site. In the conference with the French liaison mission which was held by General Old about a month ago, concerning primarily the relocation of an existing road, telegraph and power line on the site, the French liaison mission advised us that that site was not firm. So we are completely in the air at the present time as to whether or not we will build the facility at Boulhaut or will not. General Old has submitted the picture as he sees it to Headquarters, USAF in Europe, and the French liaison mission has submitted their side of the question to the minister.

At El Djema Sahim the French have agreed to give us, I believe, 4,500 acres, and the real estate desired by the Air Force to take care of all the facilities proposed for that base is about 7,500 acres. They now have submitted to the minister in France a recommendation that something like 6,900 acres be turned over to us, and we are revising the lay-out to see if it can fit in the 6,900 acres that the French propose to give. But that is still a completely unsettled question.

General PICK. Mr. Chairman, I would like to ask General Walsh to explain the agreement which the United States has with the French Government with respect to these bases, insofar as it applies to the furnishing of the necessary lands and doing such explorations as are required.

General WALSH. The terms of the agreement are that the French will furnish to the United States a suitable site on which the United States will construct the air bases. The determination of the location of that site is a joint one between the United States Air Force and the French Air Force from the operational point of view, and with the French liaison mission in respect to the acquisition of land. It has been our contention that a site which has a major highway going through it, with telephone lines and transmission lines, is not a suitable site unless those lines and highways are relocated prior to the time the United States goes into construction. At Boulhaut the estimated cost of relocating the highway is about $250,000. We feel that that is not a proper charge and was never contemplated as a charge that the United States should bear.

General PICK. That, Mr. Chairman, would establish a very important precedent in connection with the building of the NATO bases, if we agreed to go in there and do these relocations.

Mr. RILEY. I can very readily see that. Of course, the French stand in the end to gain considerably from this venture themselves. I was wondering why it was necessary to get almost twice as much land at El Djema Sahim as was first contemplated.

General WALSH. Why is there the increased acreage?
Mr. RILEY. Yes. It is almost twice as much.

General WALSH. The principal reason was that the total length of the air strip there, as at all the other bases, was increased above what was originally contemplated due to two factors; elevation and temperature primarily, and the development of the new types of aircraft. The dispersal of the ammunition storage, petroleum, oil, and lubricants facilities which will be located on the base, as well as the camp areas, and the required distances between certain facilities for safety, has necessitated the increase in the size of the base.

Mr. RILEY. I see.

Thank you.

EFFECT OF ESCALATION AND WAIVER OF RENEGOTIATION CLAUSES ON COST OF PROJECT

Mr. DONNELLY. I had one or two other questions on the costing; but, momentarily, let us take up the escalation clause.

Have we had enough experience with that escalation clause in subcontracts to know whether or not the lump-sum price or the fixed price contracts have been increased by virtue of escalation?

General WALSH. On the few small subcontracts that Atlas has used up to this time, primarily for the provision of facilities that they themselves will use during construction, to my knowledge that escalation clause has not been utilized by the subcontractors.

Mr. DONNELLY. Now, when you look at the two things separatelyone, escalation; and, two, renegotiation and treat them separately, the results may be different from combining the two. If there is the escalation clause and a waiver of renegotiation, whereby this Government precludes itself from recovering any excess profits, do you have any views as to whether the combination of those two factors will produce a result which will not be beneficial to this Government?

General WALSH. I do not believe that we will be able to subcontact in any substantial amounts with French subcontractors if we have a requirement for renegotiation. I do not believe they will accept a contract with that requirement written in. I feel confident that the French liaison mission would oppose it very vigorously.

Mr. DONNELLY. Is the United States likely to be in a position to lose if you have both the escalation clause and a waiver of renegotiation? If we give them both, so to speak, is the United States likely to lose?

General WALSH. I do not feel that we will; no.

Colonel DERBY. It might be well to add here, if I may interrupt, that the escalator only comes in when the minister directs that wages be boosted a certain amount. In other words, it is not the contractor himself who has the privilege of deciding that costs have gone up. There are official wage rates which are fixed by the Government. The escalation is determined by the French Government rather than

the contractor on that. To the extent that you feel you can rely on the local government, you are safe on that, rather than the factor of the company.

ULTIMATE COST OF MOROCCAN PROJECTS

Mr. DONNELLY. Going back to the costing, I understand that the $300 million figure for these five bases and for petroleum, oil, and lubricants was an estimate which was gotten up at the very beginning in January 1951; is that correct?

Colonel DERBY. No, sir. There was a $400 million estimate in January 1951. That never quite got to Congress. They did not quite have the courage to submit that, so they whittled it down to lower figures in the course of the process. The original program which was handed to me on the 10th of January ran to $400 million. think various items were stricken out at different times, and they are now finding their way back into this $400 million of the project you have here.

I

Mr. DONNELLY. That may very well be. As I understand it, the prime contract with Atlas is in two phases which aggregate $300 million; is that correct?

Colonel DERBY. That is correct.

Mr. DONNELLY. That was entered into in January 1951?

Colonel DERBY. The price figure was not set on that until about May.

Mr. DONNELLY. Of 1951?

Colonel DERBY. 1951; that is correct.

Mr. DONNELLY. I think the date will be May 28, 1951.

Colonel DERBY. That is right.

Mr. DONNELLY. I think it was in April or May that General Pick testified before this subcommittee with respect to the proposed reprograming of Morocco. At that time as I recall it General Pick was asked whether the Corps of Engineers' cost estimate for the five bases and related facilities had not undershot the mark and whether the cost would not be substantially more. As I recall his testimony, General Pick stated he had originally estimated that this construction would cost $300 million, and that the corps was going to build the original facilities for that figure and stay within it.

General PICK. I do not remember the exact testimony, but that sounds exactly like the impression I had at that time, sir.

Mr. Chairman, not only do I recall saying that, but we are of the opinion now that we are going to build that $300 million worth of work that we were talking about for $300 million now.

Mr. McGRATH. Has there been an increased cost since you gave us that original estimate, General?

Mr. DONNELLY. If I can help out on the increase in cost, we have a cost breakdown at pages 520-529 of these hearings. There were changes due to price increases. There was a plus change of $45 million and a minus change of $11 million, with a net cost increase of $33 million, which would have been a little better than 10 percent of the $300 million. That was adjusted by changing some of the features. But the $300 million figure which was estimated in January and May of 1951 as of today, as we sit here, I understand to be a firm figure for the original work.