Mr. THOMAS. You better break it down into two parts, material and overtime payments.

Mr. YATES. Yes.

PREMIUM PAYMENTS FOR LABOR

Mr. Cook. The premium time for labor, which is based upon an estimate of the number of man-hours that the total job will be, on a 54hour workweek, amounts to approximately $70,000,000.

Mr. THOMAS. That is over and above the 40-hour week?

Mr. Cook. Yes, sir.

Mr. THOMAS. How much is included in that for double time on Sundays?

Mr. Cook. On our work we generally do not work on Sundays. This is based on a 54-hour workweek, six 9-hour days. There are occasions on certain phases of the work when they might have to work on Sunday, but it would be a very small percentage of this total.

Mr. THOMAS. Give Mr. Yates the premiums on your materials. Mr. Cook. The premium on materials is not broken out as such. I only have the premium time on labor broken out.

Mr. YATES. Was that one of the factors that went into your estimate?

Mr. Cook. Premium time on labor?

Mr. YATES. No, premium payments on materials. Did that go into your estimates at all?

Mr. Cook. That is right, there is a certain amount, and the portion that Mr. Gore read was primarily, I believe, on the chemical-processing plant at Dana.

Mr. THOMAS. Would you hazard an estimate of what premium payments for material have been paid, and what you estimate they will be in the future?

Mr. Cook. We do not have that broken out, sir; we can obtain that for you.

Mr. GORE. Mr. Chairman, I could go on all afternoon long, but I do not feel justified in doing so. I am going to let the other members inquire.

SUMMARY OF ESTIMATES OF COST FOR SAVANNAH PROJECT

Mr. THOMAS. I only have a few questions here. We got out the record of the hearings which were held in December of last year. believe this is about the third estimate that the Commission has been here for on this plant. What was the first amount of money that the Commission requested?

Mr. Cook. The first amount of money that the Commission requested in the first supplemental for land acquisition?

Mr. THOMAS. No, I meant for the total project.

Mr. Cook. In the first supplemental

Mr. THOMAS. $247,854,000; in the second it was $392,000,000 plus savings which makes a total of $668,100,000, and now you want $484,000,000 plus.

Mr. Cook. That is right.

Mr. THOMAS. You state in your justification that even with this figure, making a total of $1 billion and almost $200 million that your plans are only 10 percent complete. Is that correct?

Mr. Cooк. At the time this estimate was prepared the plans were approximately, on an average, 10 percent complete.

Mr. THOMAS. How much more are you going to be in here wanting over and above this $1,200,000,000 before you wind up this job at Savannah?

Mr. BOYER. If I may answer that, Mr. Thomas, that cannot be determined yet. That is the order of magnitude of the estimate based upon the scope we have established for the project. If we make a precise estimate

Mr. THOMAS (interposing). If you only have your plans 10 percent complete, Mr. Boyer, you cannot give us anything else. There is no telling what it will cost.

Mr. BOYER. That is correct.

Mr. THOMAS. There is no telling what it is going to cost the way you are going in paying premiums on materials and crossing every "t" and dotting every "i" when everything you touch, even the best, is not apparently quite good enough for you. I was over in the Bethlehem Steel plant about 2 or 3 weeks ago, or, rather, I passed by one day, and I saw 15, 20, or 30 locomotive engines there. Do they have one of these elaborate signal towers like you are building? Anyway, you have not overlooked any detail. Čan you give us anything like a reasonable guess as to how much more you are going to have to have for this project at the rate you are spending now?

Mr. BOYER. This estimate as presented here does not have any money in it for the escalation of labor or materials. If that should take place, then I would think we would possibly have to come back for more money.

Mr. THOMAS. Oh, the $70,000,000 labor premium payment is not included in here?

Mr. BOYER. Yes, but that is not the escalation. Escalation means if wages go up.

BREAKDOWN OF ESTIMATED COSTS OF SAVANNAH PROJECT

Mr. THOMAS. How is the breakdown between material and labor running on this project?

Mr. Cook. Labor, $330.5 million, or 28 percent of the total. The materials are $468.2 million, or 40 percent of the total. Other costs are 32 percent of the total, or $381.1 million.

Mr. THOMAS. What are the other costs?

Mr. Cook. Engineering design, $50.1 million, premium time, $70.4 million, and construction facilities-

Mr. THOMAS. You mean that engineering design is 32 percent or is 4 points above your labor costs?

Mr. Cook. No, sir; the labor costs are $330.5 million.

Mr. THOMAS. I thought you said the labor costs were 28 percent. Mr. Cook. Yes; the labor costs are 28 percent or $330.5 million. The engineer-designing costs are estimated to be $50.1 million.

Mr. THOMAS. I thought you said 32 percent. What percentage of the total is the engineer designing?

Mr. Cook. It is less than 5 percent of the total estimated cost.

LAND-ACQUISITION COSTS

Mr. THOMAS. I notice here we were talking with Chairman Dean on page 183 of the hearings on the second supplemental appropriation bill for 1951, which were held on December 6, 1950, and we asked Chairman Dean with reference to the acquisition of land:

How much will you spend for land?

Mr. DEAN. We have not condemned the land as yet. It is a very large tract of land. It is approximately 250,000 acres.

Mr. THOMAS. What is the average cost per acre?

Mr. DEAN. The estimates and studies of our survey teams brought it to something like $40 an acre.

Mr. THOMAS. How much will that be for land before you get through?
Mr. DEAN. About $10,000,000.

Now, you want $17,800,000. You missed the cost just a cool 80 percent in your second estimate, and you had survey teams down there. Mr. Cook. The estimated cost per acre runs around $55 per acre at the present time.

Mr. THOMAS. Could not your survey teams back in December have found that out?

Mr. Cook. You cannot determine accurately what the final average cost per acre is going to be prior to start of acquisition for such a large tract of land.

Mr. THOMAS. Do you mean the Commission cannot? Other people can. Private industry figures it out pretty well before they buy it.

Mr. Cook. You can arrive at a fairly accurate estimate prior to acquisition of land as to what it is going to cost for small tracts of land. Mr. THOMAS. Who made this estimate; did you make it? Mr. Cook. The original estimate on the land?

Mr. THOMAS. Yes. Are you an old land buyer?

Mr. Cook. No, sir.

BACKGROUND OF DIRECTOR, DIVISION OF PRODUCTION (RICHARD W. COOK)

Mr. THOMAS. What has been your experience in private industry before you went with the Commission?

Mr. Cook. I worked for 5 years in the buildings and grounds engineering department, working my way through school and graduated as a civil engineer.

From 1933 until 1940, I worked with private contractors on construction.

In 1940, I was ordered into active duty with the Army and served as constructing quartermaster and area engineer on construction jobs for the Quartermaster Corps and the Corps of Engineers.

In 1942 and 1943, I served as executive officer of the Washington Engineering District for the construction program handled under that office.

In 1944, I was transferred to the Manhattan District and served in the Manhattan District on the gaseous-diffusion plant as plant operations officer.

I have served in the Manhattan District and the Atomic Energy Commission since that time.

I left out one period. From the time I graduated until the time I went into the Army, I worked part of the time with construction

contractors, and the balance of the time, approximately 4 years, with a firm of architect engineers out of Chicago.

Mr. THOMAS. You have had a lot of experience in the engineering field, then.

Mr. Cook. Yes.

Mr. THOMAS. What year did you say you graduated from school? Mr. Cook. 1933.

Mr. THOMAS. What school did you graduate from?

Mr. Cook. Michigan State.

Mr. THOMAS. It is a good school.

ACCURACY OF COST ESTIMATES

Reading further, I asked Mr. Dean:

What do you think that activity will cost by the time you get it set up and in operating condition?

Mr. DEAN. I would say in the neighborhood of $600,000,000.

Then I asked:

Do you think you will be able to hold it down to $600,000,000?

Mr. YATES. What did he say?

Mr. THOMAS. Mr. Dean said,

We hope so.

He said,

I would hate to be frozen to that

I hope you would not too, because you have already doubled it

because you must appreciate that the estimates we are making today are on the cost of production units that have never been built before. They are estimates which are based on comparable cost of other facilities.

You have really missed some guesses here. Mr. Gore, do you see any objection to putting the table on page 12 in the record?

Mr. GORE. I would rather have the Chairman of the Commission decide on that.

Mr. THOMAS. There is nothing in the world secret about it.

Mr. GORE. It is marked "secret."

Mr. BOYER. I think the amount of money going into the production of reactor facilities and the chemical-processing-plant facilities might be of some help to an enemy in trying to approximate the order of magnitude and scale of our operations.

Mr. THOMAS. We will just pass it by and say here is one facility for which the estimate was $45,000,000, but your revised estimate today is $72,000,000. Do you think that will be a firm estimate now? Mr. BOYER. That is pretty firm because that plant is well along toward completion.

LAND ACQUISITION

Mr. THOMAS. Now, on your land acquisition costs, you started out with $10,000,000 and now you have it up to $17,850,000. Do you think that is going to be firm now?

Mr. Cook. Based on our experience to date, it represents a realistic figure.

Mr. THOMAS. Are you through down there with your land acquisition?

Mr. Cook. No, sir; only part through.

Mr. THOMAS. Have you tried condemnation?

Mr. Cook. Yes, sir; in a few cases it has been necessary when there has been a disagreement on price.

Mr. THOMAS. You say the Corps of Engineers is actually doing the work of acquiring the land. Does the Corps of Engineers consult with you and ask you what price they should pay for the land and ask you for a bill of particulars, or did you just say, "Gentlemen, here is the job, and here is a blank check; get the land"? Which procedure did you follow?

Mr. BOYER. What we do is instruct them to acquire the land on the basis of the fair price in the area; and, when they cannot do that, then we instruct them to go through the condemnation route, but that has to be based upon what is the value in the area.

Mr. Cook. That is right. There is a total of 1,500 tracts. Out of that there have been 748 appraisals; there have been 549 pieces accepted; there have been 357 payments classed as completed, and there have been 74 tracts taken under condemnation.

Mr. THOMAS. In order to protect yourselves, did you give any consideration to going into the community and saying, "Gentlemen, we want to do what is right and fair by everybody, but we folks are total foreigners here; we do not live in your community, and we do not know what is the right and fair thing to do. All we want to do is what is right and fair, and take your word or let your local Federal court decide it"?

Mr. Cook. In the case of disagreement over the appraisal of the representative of the real-estate owner, then the local court does decide what is the fair value, and there have been 74 of those cases submitted.

Mr. THOMAS. How did you come out when you pursued condemnation as against the price you paid by agreement?

Mr. Cook. Generally the price is very close to the appraisal, but in most instances it is a little bit above.

Mr. YATES. How does it compare with respect to the price you paid without condemnation?

Mr. NELSON. $10 more in the last case we had.

Mr. YATES. $10 more per acre?

Mr. NELSON. When tried in the court.

INCREASES IN ESTIMATED COST OF PROJECTS

Mr. THOMAS. Here is a project on which your original estimate was $40,000,000, and now you have an estimate of $125,648,000. Why the overrun there of about 305 to 310 percent?

Mr. Cook. The original estimate was based on a plant similar to the Dana plant, one of less capacity. The present plant is of higher capacity. It has more flexibility and it is built for permanance, for continuous use, whereas the Dana plant was not built on that basis.

Mr. THOMAS. With a continuation of the steam, power, and water facilities, all of which were substantially in existence?

Mr. Cook. At the Dana plant the steam and water-distribution system was available for process use. At the Savannah River plant the steam and the water-distribution system has to be constructed separately. In addition, we are able to procure electricity for the