that is going to be the policy for the future, to continue to obtain the material by premium payments?

Mr. Cook. No. We have outlined our position in respect to the major portions of the work, that the major portion of the materials. are procured without payment of premiums. Only occasionally is it necessary to do that.

Mr. YATES. The justification which is before us is predicated on the necessity for making premium payments for materials, is it not?

Mr. Čook. Yes. We realize that in order to have items that we have to have, that some premium payment will be necessary, where the manufacturer may have to pay premium for material and labor to make delivery consistent with construction schedules.

Mr. YATES. Have you taken that into account in your justifications? Mr. Cook. Yes.

Mr. YATES. Have you done the same thing with respect to premium payments as to labor?

Mr. Cook. Yes.

Mr. YATES. Can you tell us what portion of the justification is predicated upon the payment of premiums?

Mr. Cook. No. We will have to do some checking on that, and advise you later. We do not have that broken down today.

Mr. YATES. Have you put into the justifications that an additional amount is for contingencies to apply to premium payments? Are your justifications based on including premiums?

Mr. Cook. The total contingency in the justification before you represents approximately 2.8 percent of the total cost, where under normal conditions it will run around 10 percent.

Mr. YATES. For a job like this?

Mr. Cook. Yes. Particularly when you prepare estimates at the time the construction is between 2%1⁄2 and 3 percent complete, and the plans at the time the estimate was prepared were approximately 10 percent complete. You cannot make a very realistic estimate until the plans and specifications are approximately 90 percent, and the job is approximately 60 percent complete, and at that time we will review the estimates, a revised estimate will be prepared.

Mr. YATES. Have you found in your purchase experience that purchases of steel from warehouses have been made necessary by manufacturers? In other words, have you found that manufacturers have made deliveries to warehouses in order to get the additional purchase made?

Mr. Cook. Oh, no. The only time we buy from warehouse stock is on infrequent occasions, when it is necessary to get one part of a building or facility completed and in operation at an early date.

On the large building, you may have all but a few portions of very important material. In order to meet a completion schedule, you go out to the warehouse and buy it and get it fabricated in order to complete the job.

DIFFICULTY IN OBTAINING MATERIALS

Mr. YATES. Have you had difficulty in obtaining materials for construction?

Mr. Cook. Yes, we have. We have worked very closely with the NPA. The materials market is getting tighter and tighter, and in order to get delivery in time

Mr. YATES. What has been the reason for your not being able to obtain those materials for your plant, because they are going to civilian production?

Mr. Cook. No. I was referring to the materials market

Mr. YATES. I know.

Mr. Cook. The material market is becoming tigher and tighter and in order to insure deliveries of material and equipment we have had to work very closely with the NPA in order to obtain directives.

The purpose of the directive is to secure the place in a manufacturer's production line necessary to obtain the delivery required to meet our program schedules. Before the NPA will issue a directive on a manufacturer or mill all other practical means of obtaining the required deliveries without a directive must be exhausted.

Mr. YATES. Where are you with relation to the priority schedule? Are you not in about the same place with the military?

Mr. Cook. Yes; we are.

Mr. YATES. There certainly should be enough steel to supply the military, as well as the plans of the Atomic Energy, with respect to this type of construction.

Mr. Cook. There is not at this time. One of the critical things we have had to deal with recently is structural steel. For instance, 10 days ago we had to obtain from the NPA a directive for the structural steel for the C-33 building at Paducah, Ky.

Mr. YATES. Where is the steel going?

Mr. Cook. I am not familiar with the over-all requirement picture;
I am just familiar with it as it affects our program.
Mr. YATES. Are your labor contracts with unions?
Mr. Cook. All of the skilled personnel.

Mr. YATES. What about your construction?
Mr. Cook. It is all union labor.

Mr. YATES. It is all union labor.

LAND AREAS TO BE ACQUIRED

Mr. PHILLIPS. You testified, I think, that your original estimate was in the neighborhood of 200,000 acres for which this estimated price had been set up in the record. I do not know that you have testified anywhere concerning a final decision to purchase less or more than 200,000 acres.

Mr. Cook. Mr. Williams indicated the original estimate was based on approximately 150,000 acres. This estimate is based on 200,000

acres.

Mr. PHILLIPS. There is a question in my mind which arises from your off-the-record discussion regarding the distance between places, and I feel that you must be using a very small part of your entire area that you purchased. Certainly you have not laid tracks down on anything but a very small part.

Mr. Cook. If you wish, I can show you a plot plan of the total area with the layout of the major production areas.

Mr. PHILLIPS. Why do you not just say that you are using a certain percentage, and tell us why you are paying so much for land and are using only a small part of it.

Mr. Cook. The large acreage is required for safety reasons.

Mr. PHILLIPS. Is that all?

Mr. Cook. Yes

Mr. PHILLIPS. You do not have any requirements to protect the watershed or any other item of that kind?

Mr. Cook. We can conduct operations so it will not contaminate the watershed. There were two reasons

Mr. PHILLIPS. My figures are simply a rough estimate taken from a length of the fence, and your statement regarding the area to be served by the eight locomotives, and I think it must be a very small percentage of the total land.

Mr. Cook. There are approximately nine separate areas.

Mr. Phillips. All fenced?

Mr. Cook. The area itself is fenced.

Mr. PHILLIPS. The entire area, that is, the entire heart is fenced and the separate areas?

Mr. Cook. Yes; they are fenced. Now, maybe this ought to be off the record

(Off-the-record discussion.)

COMMUNITY FACILITIES

Mr. PHILLIPS. You have testified that you are not contemplating any residential section, any community. Does that mean you are not building any schools?

Mr. Cook. The Commission is not building any schools, but we are working with the Office of Education which in turn is working with the county and city officials representing the areas affected to provide schools that will be necessary for the whole area.

Mr. PHILLIPS. Then ought this committee understand from the previous experience that you will shortly be up for an appropriation to subvent the school district to help them in their claim that they are unable to supply the schools without Federal aid?

Mr. Cook. No. I understand that the Federal Security Agency has an adequate appropriation to provide the schools without any participation by the Commission.

Mr. PHILLIPS. That is, the Federal Government will spend some money there?

Mr. Cook. Yes.

Mr. PHILLIPS. Are you going to operate bus lines?

Mr. NELSON. No, we are not going to operate a bus line under our present plan.

Mr. PHILLIPS. Are you going to subsidize a bus line?

Mr. NELSON. No.

Mr. PHILLIPS. Are you going to operate a cafeteria?

Mr. NELSON. One.

Mr. PHILLIPS. On the ground?

Mr. NELSON. Perhaps one main cafeteria, one to serve each major manufacturing area.

Mr. PHILLIPS. Your record for operating cafeterias does not compare well with some of the more successful operators. Are you going to get a good manager?

Mr. NELSON. We have Nylon Bros. to operate the cafeteria which is to be used during the construction period. They are nationally known.

Mr. PHILLIPS. I do not mean during construction; I mean once your construction is finished.

Mr. NELSON. The contractors have not yet been selected.

Mr. PHILLIPS. You are still going to operate a cafeteria for em ployees after you are finished?

Mr. NELSON. We will have to; yes.

Mr. PHILLIPS. Are you going to supply utilities; are you to furnish the residential area, outside your ground?

Mr. NELSON. No.

Mr. PHILLIPS. How are they going to get power?

Mr. NELSON. They expect to be able to get the defense housing, and that private industry will build the housing and the utilities and rent the houses at such price as to amortize their investment. That is one thought. Another is that they may be able to get Federal aid under the Defense Housing Act for the construction of these utilities. Mr. PHILLIPS. You do not think that item really represents an expense for the production of atomic energy? You do not think you have to divide it in such a way that it will show up later before the committee?

Mr. Cook. No. What we try to do is to do like normal industry. does, which is to provide the facility for the production of fissionable material and not provide the additional community facilities. They will not be in our budget. Of course, it is often true that to some extent the Federal appropriation

REVIEW OF PREMIUM PAYMENTS BY AEC

Mr. PHILLIPS (interposing). There is another point that is not quite clear to me. You talked about the payment of premiums, but what happens if you made a contract, and the contractor then came out with a premium payment? I think both you and Mr. Nelson testified that you have a check against the contracts, all contracts above $10,000 you do check contracts below $10,000?

Mr. Cook. They are audited, yes.

Mr. PHILLIPS. If they are above $10,000 you go into them very carefully

Mr. NELSON. Prior to audit.

Mr. PHILLIPS. Prior to audit, and prior to the expenditure of the money. Below $10,000 the money has been paid, often, so in effect it is a post-audit. Now, suppose you find in the $10,000 contract that payment of a premium for steel has been made, or any payment that you did not think was adequately justified; under those conditions and circumstances, what can you do; what authority do you have to deny the money to the contractor?

Mr. NELSON. We do not deny it. Our experience to date and the policies and practices followed by du Pont are such that we are sure that all such payment will be with adequate justification.

Mr. PHILLIPS. Now, could you very well just charge it back to them?

Mr. NELSON. I doubt that this situation would ever arise.

Mr. PHILLIPS. Have you ever done so?

Mr. NELSON. We have not had occasion to do that.

COMMENTS ON INVESTIGATION BY REPRESENTATIVE WHEELER

Mr. PHILLIPS. I am not sure that you can cross Mr. Wheeler quite as easily as you have done. I think the matter bears a little investigation by you

Mr. NELSON. We have investigated it.

Mr. PHILLIPS. I have a clipping here in which Mr. Wheeler is quoted as having spoken of a number of specific instances of waste. For instance, one where he said that there were about 15 men that he saw digging a hole by the side of the road, about 2 or 3 feet across, and that as a result traffic was blocked, and it was necessary for one man to be assigned to direct traffic. It would seem to me rather obvious that something is wrong and that you should investigate that. Mr. NELSON. We are.

Mr. PHILLIPS. And that you might explain it or admit it, but I do not think you can pass it over so easily by saying you are doing a first-class job down there and everything is on the up-and-up, and that you have no waste on the job.

Mr. NELSON. We are looking into that, but it is a little difficult to find these specific instances, because we do not know where Mr. Wheeler was. We know he was not in the major fenced construction area, but apparently he drove through the project on an existing highway.

URGENCY OF PRESENT REQUEST FOR FUNDS

Mr. PHILLIPS. I have just one more question, which I wish to ask of you, Mr. Dean: Suppose Congress had adjourned on July 31, or even if we had adjourned on August 31 or the 1st of September, would you have asked the President to call Congress back in special session to appropriate the amount of money for which you are asking now?

Mr. DEAN. That is a very difficult one, Mr. Phillips. I think if we could have gotten the bill through, possibly, by the latter part of January, it would have taken care of the rate of expenditures through the fiscal year.

Mr. PHILLIPS. There is always a supplemental bill in January.

Mr. DEAN. It is considered frequently in January, but in most instances the money is not available at that point. But if the money could have been available, if we could have gotten it, we could have gotten by

Mr. Cook. Through April.

Mr. PHILLIPS. Beyond next April.

Mr. BOYER. We might have had this difficulty; we might have been in violation of the Deficiency Act.

I

Mr. PHILLIPS. I would like to say something now off the record, if may

(Off the record discussion.)

NEED FOR HOUSING IN SAVANNAH AREA

Mr. THOMAS. Gentlemen, I do not wish to keep you any longer, but there is one further question, and that is dealing with the housing condition. We will have before us someone from the Housing Ad