The first of these requests the elimination of language which restricts the purchase of fuel oil. The Navy has purchased oil under the provisions of the so-called Buy American Act (47 Stat. 15201521) since the date of its enactment on March 3, 1933. Under date of September 15, 1937, however, the Acting Comptroller General ruled that the limitation in the annual appropriation act, which is more restrictive than the general Buy American Act, will govern in future contracts made by the Navy. In view of this decision of the Comptroller General, the Navy Department must now advertise its requirements for fuel oil under the provisions of the current annual appropriation act. The whole Federal Government, including the Navy Department, is restricted in the purchase of all commodities by the Buy American Act, with the single exception that the Navy Department is now restricted in its purchase of fuel oil, not by the Buy American Act, but by the specific provision of the appropriation act. Since the petroleum industry of this country is protected by the Buy American Act to the same extent as all other industries, the special provision of the appropriation act appears no longer to serve any useful purpose. In fact, it may prove definitely detrimental to the Navy in providing its requirements of fuel oil by further restricting competition and it may well lead to difficulties through bidders overlooking this special provision as interpreted by the Comptroller General and assuming that the Buy American Act applies.

The second is a change in the wording of the naval appropriation bill in order to augment commercial sources of supply for the Navy. For several years, every annual appropriation bill has carried a provision which prevents the assignment to private yards of work which can be manufactured or produced in a Government navy yard or arsenal, when time and facilities permit and when, in the judgment of the Secretary of the Navy, it would not involve an appreciable increase in cost to the Government. Under conditions which have obtained for several years, and under present conditions, time and facilities permit the manufacture of many types of ordnance and other material by Government plants, and commercial manufacture is not sufficiently less expensive to require an exemption from the provisions quoted. Existing Government facilities, however, are totally inadequate to meet wartime needs. The law has the effect, therefore, of making it impracticable for several bureaus of the Navy Department, the Bureau of Ordnance in particular, to prepare in time of peace to meet adequately many of the problems of procurement and production with which they will be faced in time of

war.

Congress has recognized the necessity of providing commercial and Government facilities for the construction of naval vessels. The restrictive effect of the provision carried in the annual appropriation act has been to concentrate the manufacture of a number of items in Government yards, with insufficient facilities for wartime expansion and with no facilities or experience being maintained by private plants. We have thus drifted into a situation which is highly dangerous and might prove to be a fatal defect in time of war. The additional language requested will permit the Secretary of the Navy to determine what contracts should be let to private plants in order to avoid a situation which will be detrimental to the national defense.

PUBLIC WORKS

Continuing studies of public works requirements are made by the Navy Department. The items selected for inclusion in the estimates are those considered of the highest priority and are urgently needed. They continue the development of ship berthing and overhaul facilities at Pearl Harbor, provide for continuing the development of Alameda, and provide quarters at Coco Solo, Balboa, and Norfolk, and provide for a medical center at Washington. The shore facilities must be expanded to meet the increasing needs of the fleet and to provide quarters for naval personnel in isolated stations.

Lack of sufficient funds to transfer essential civil personnel overseas causes embarrassment and reduces efficiency out of all proportion to the sums involved. The funds included in these estimates are all required if such embarrassment is to be avoided.

WAGE SCALE

Recent reports indicate that outside wages are increasing, so that the differential of 30 to 40 percent existing a few years ago and up until recently, is now about 14 percent. It is possible that outside wages will reach the general level of Navy wage scales during 1939, in which event the Navy Department will be required to revise its wage scale.

Mr. UMSTEAD. Why?

Mr. EDISON. We are forced by law to convene the wage board and pay prevailing wages whenever our wages are out of line with the prevailing wages in private industry.

Mr. UMSTEAD. Well, they would not be out of line if prevailing wages were just on a parity with the Navy's wage scale, would they? Mr. EDISON. Not on a parity, but suppose they went by it?

Mr. UMSTEAD. In determining that parity do you consider such things as steady employment, annual and sick leave, which the navyyard employees are entitled to, over and above the benefits accruing to labor outside of the navy yards?

Mr. EDISON. I am not sufficiently familiar with the operations of the wage board, because one has never been convened during my tenure up to date. There has been such a wide disparity between wages paid in the navy yards and those paid outside ever since 1929, you might say, that there has been no necessity for even considering calling the wage board. Congress "pegged" the wages of navy-yard workers at the figures prevailing in 1929.

Mr. UMSTEAD. At least it has not reached the stage where it is necessary for us to take any action about it now?

Mr. EDISON. I think not; and under present business conditions, I have grave doubts, real doubts, as to whether it will be necessary possibly throughout next year. If business conditions improve, however, and we run into another period of prosperity, in the spring, and from there on, these outside wage scales may force us to convene this Wage Board and they will adopt their usual and customary routine as to how they determine wages.

AVIATION

The title to the Alameda Naval Air Station, free of all encumbrances, was turned over to the Navy Department by the city of Alameda on the 26th of November 1937, at a cost of $1.

Mг. THOM. Due to the efforts of this committee, your Department was willing to spend $150,000 to clear the title out there, but we stopped it. We saved $150,000.

Mr. EDISON. Well, that is very good news.

The Navy Department arranged the terms of the transfer in consultation with the Attorney General in accordance with the terms of the authorizing act. The Curtiss-Wright claims to the title were liquidated by funds contributed for that purpose by the San Francisco Bay community. It is the intention of the Navy Department to start as soon as practicable with the construction of this station, using the $1,000,000 carried in the 1938 Naval Appropriation Act for that purpose.

The increase in operating planes during the past 3 years and the further increase planned for 1939 has required the procurement of additional shore facilities for their overhaul, and the training of the personnel. The adjustment of shore facilities to keep pace with the additional planes will continue for several years.

ADVISORY STAFF

Mr. UMSTEAD. Mr. Secretary, I understand that you have recently reorganized your office by creating an advisory or consulting staff composed of certain sections. Will you give us the names of the sections and the general purpose of the new arrangement?

Mr. EDISON. In order to facilitate the business of my office, I have prepared and issued a functional organization outline for the information and guidance of the bureaus and offices of the Department, and to indicate the flow of detailed matters to and from the Assistant Secretary.

This organization outline contemplates the inclusion of staff functions of an advisory and consulting character in the Shore Establishments Division, in addition to other duties performed by this Division, which are provided for in existing general orders.

This organization outline also effects a consolidation of the related functions, previously exercised by this Division, into four major sections that will operate under the director of the Shore Establishments Division. By the addition of these staff functions to the other work formerly handled by the Shore Establishments Division, detailed liaison between the Department bureaus and offices and the Assistant Secretary will be facilitated.

This organization will not affect any existing laws, general orders, or regulations pertaining to the Assistant Secretary of the Navy or the Shore Establishments Division, nor does it in any way alter the present legal responsibility or authority of other Department bureaus. and offices. The organization as it is at present planned may be changed in respect to detail from time to time, as experience may require.

The names of the sections are:

(A) The Navy Yard Management Section. (B) The Plant and Facilities Section.

(C) The Appointment and Information Section. (D) The Public Works Section.

Each of the foregoing sections will be in charge of an officer of suitable rank and of special training and experience to properly handle the work of the section.

Mr. UMSTEAD. Will the new arrangement mean the addition of naval officers and civil employees?

Mr. EDISON. No, sir; In fact, I think there will be an economy. It was merely the regrouping of work of existing people and putting them under the direction of four rather than eight officers having specialized experience. For instance, an engineering-duty-only officer would have certain things to do; a civil engineer would have certain other things to do; and so on. We would then have a well-rounded group of people to whom, when any problem came to me, I would be able to present this question and get some information from somebody conveniently located.

Mr. UMSTEAD. Under the system heretofore prevailing you, of course, have had available the bureaus involved, from which you could obtain information. For example, if you desired information dealing with some question of engineering, you would call the chief of that bureau.

Mr. EDISON. That would still obtain.

Mr. UMSTEAD. You do not, then, mean to undertake to set up in your office an arrangement which would have available within your office all the records and information available to a bureau?

Mr. EDISON. Oh, not in the least. The chiefs of bureaus will still be the principal people. There is no change in that.

Mr. UMSTEAD. I did not mean to infer that that would not continue. Of course it would prevail, of necessity. But how could this person in your office who is an expert in engineering, to whom you referred a moment ago, give you detailed information dealing with the Bureau of Engineering without obtaining that information from the bureau itself?

Mr. EDISON. That is exactly where he will obtain it.

Mr. UMSTEAD. Then, if I understand your analysis of what you are trying to do, it is merely to have a person in your office as a contact man between you and some particular bureau?

Mr. EDISON. On certain problems; but the door is still just as widely open to the chiefs of bureaus, and they will continue to be the principal ones upon whom I will place dependence for counsel and advice. The idea is like this. A problem will come in to me involving perhaps three or four bureaus. Rather than my sending for the four different chiefs of bureaus, I will say, for instance, to the engineer in my office, the engineering-duty-only officer, “Will you do the leg' work on this, and gather the information from the Bureaus and try to consolidate it so that when we meet with each of the bureaus we will have something crystallized?”

Mr. UMSTEAD. Of course we are interested not only from the standpoint of efficiency, but from the standpoint of expense; and I understand you to say that it will involve no additional expense

whatever.

Mr. EDISON. It should produce an economy. I would like to give you the figures on that. I do not know whether they have been finally worked out.

Mr. COMPTON. I might say, Mr. Secretary, that the shore establishments division originally consisted of eight sections-shore establishments 1 to 8, inclusive. The new arrangement, when it becomes operative, would reduce that number from eight to four. We would have four sections instead of eight, and the related functions would be coordinated and consolidated in these four sections rather than eight sections. So it ought to reduce personnel rather than increase it, with the corresponding economies.

Mr. EDISON. I can say this: There is no idea of duplicating any records, any work, any clerical staff or anything else. It is more to give me intelligent advice, which will come to me just as it always has, through the chiefs of bureaus, but will come to me in a more orderly manner and be gathered by people who are trained in the particular problems involved.

DESIRABILITY OF CHANGING EXISTING NAVY LAWS

Mr. UMSTEAD. Mr. Secretary, since you became Assistant Secretary of the Navy the Department has had the advantage of a trained' businessman. Based upon your experience prior to your present position, I should like to know what your view is with reference to business as conducted in the Navy as compared with the efficiency of business outside the Navy, dealing with the expenditure of Government funds.

Mr. EDISON. May I state it this way: When I came down to this particular position, I expected to find a rather red-tape-ridden organization, without any progressive ideas, and with a wasteful way of handling everything, and inefficient throughout. I have had the privilege of working now less than a year with these different departments, and I have also had the privilege of inspecting nearly all of the shore establishments-that is, industrial shore establishmentsand I have found, much to my surprise and delight, that the whole thing seems to be going very well. They do operate under a lot of handicaps, which is necessary to some extent on account of its being a government function. This sheaf of laws, for example [indicating causes a great many things that possibly should be studied and rectified.

There is the question of overage vessels. We have a situation in Philadelphia where some of these very, very old ships that are useless are lying up there, and there is a possibility that the ice might come in and crush the hulls and they might sink. The question was, Shall we sell them or not? Well, in the desire to obtain this scrap, I took the position that it would be much better to cut them up and save the valuable scrap instead of selling the ships as hulks, and getting just scrap iron prices for the whole thing. So I started out that way; and they said:

That can't be done; there is a law that was passed many years ago which states that no vessel can be sold as scrap unless it is sold as a complete vessel.

So we are faced with selling these complete vessels as hulks, for a very small price.