(or all mails offered of a less amount). Any mails offered in excess of eight hundred (800) pounds shall be carried at a rate per pound. However, the contractor will be required to carry excess mails (in addition to 800 pounds) on any flight only in such amount as in the opinion of the pilot can be safely carried, with preference in loading to be given the mails over all other traffic (including passengers).

7. If the contractor makes any voluntary flights either way over the route in addition to the authorized flights, it shall carry all mails offered on such flights without any pay on the mileage basis. Any mails so carried shall be credited to the required flights of the month in which any such voluntary flight started, and if the amount of said mail so credited involves an excess for the month over the specified load on all required flights in the same direction, the contractor shall be entitled to pay for the amount in excess of the specified loads at the pound rate for excess mails.

8. If the contractor voluntarily lands its aircraft at intermediate points on the route in addition to the points specifically required, it shall carry all mails offered to and from such points without allowance of additional pay for any increased mileage via any such additional landing point.

9. The contractor shall receive and deliver the mails at the post offices at all points on the route unless other arrangement is made satisfactory to the Pos.master General.

10. The contractor shall provide, without additional charge, transportation for representatives of the Post Office Department traveling on official business, upon credentials issued by the Postmaster General.

11. The con.ractor shall, at all times during the term of the contract, perform the service with safe and suitable aircraft. Such aircraft shall be of the multimo.ored seaplane type, capable of sustained flight on 50 per cent of its motor power at an altitude of one thousand feet; it shall have a minimum approved cruising speed of not less than 125 miles per hour; it shall have fuel reserve sufficient to allow for a thirty-mile-an-hour headwind, plus one hour, and it shall have a minimum capacity for six passengers. It shall also be equipped with fireproof mail compartments sa isfactory to the Postmaster General. If after the initial four-year period of operation improved and more adaptable sea or land planes are available for this service, the company may be required to reequ p the route accordingly. The aircraft to be used in the performance of service on this route shall further meet the requirements that may be specified by the United States Department of Commerce and the contractor shall submit with its bid a certificate from that Department to the effect that the equ pment offered meets the requirements, both as to airworthiness and adaptability to the particular service. The allowable weight of the original aircraft equipment shall include a passenger load, but the actual carrying of passengers will not be undertaken until authority for such is granted by the Department of Commerce. The operating methods to be employed, safety features and devices shall be approved by the Department of Commerce prior to the inauguration of the service.

12. Unless otherwise agreed to by the Postmaster General, all flying equip ment used on this route shall be of United States manufacture, and all other equipment and supplies necessary for the performance of the service shall be of United States manufacture or United States products if practicable. Except in emergency all pilots and flying crews shall be citizens of the United States and the pilots licensed by the U. S. Department of Commerce, and all other employees of the contractor in the performance of service shall be citizens of the United States as far as may be practicable.

13. The contractor must make its own arrangements at its own expense in securing concessions to operate in the countries traversed, for landing fields or facilities to land the mails from the water, lighthouses, radio stations, and such other aids to navigation and other arrangements as may be necessary for the proper performance of the service, unless some such aid is provided by a U. S. Government Department authorized to do so.

14. Bidders and contractors must be citizens of the United States. A corporation in order to be eligible as bidder and contractor must be organized under the laws of the United States, or a State, Territory, District, or possession thereof; its president and managing directors must be citizens of the United States; title to at least 75 per cent of its stock must be vested in citizens of the United States free from any trust or fiduciary obligation in favor of any person or persons not citizens of the United States, and must be free 51314-367

from control by any means whatsoever by any person or persons not citizens of the United States or by any other corporation conrolled by a person or persons not citizens of the United States.

15. The Department will not countenance the undue promotion of the sale of stock of a bidding or contracting corporation upon the representation or basis of securing or having this mail contract. If any such promotion or attempted promotion of sale of stock be unwarranted in the opinion of the Postmaster General, he may rescind the acceptance of a proposal or annul the contract.

16. The contractor shall keep its books, records, and accounts relating to the contract made under this advertisement and to the maintenance and operation of its aircraft and services covered by this contract in such form and under such regulations as may be prescribed by the Post Office Department, and, further, it shall furnish, upon notice from the Post Office Department, such statements of financial operations, special reports, memoranda of any facts and transactions appertaining to the performance of the contract or transactions or operations thereunder, directly or indirectly affecting the financial results of such operation, and including all transactions or operations appertaining or subsidiary thereto, which in the opinion of the Postmaster General may affect the financial results in the performance of, or transactions or operations under, such contract. Representatives of the Post Office Department shall be permitted to examine and audit the books, records, and accounts of the contractor covering the operation of the contract whenever the Postmaster General may deem it advisable. Special agents or examiners that may be employed by the Post Office Department shall be permitted to examine all accounts, records, and memoranda kept or required to be kept which relate directly or indirectly to the performance of the contract. The accounts, records, and memoranda of the contractor relating to the contract shall be preserved as directed by the Postmaster General. The provisions of this paragraph shall apply also to affiliate, subsidiary, and holding companies. For failure of the contractor to comply with any provision of this paragraph, the Postmaster General may impose a fine or fines or annul the contract.

17. The contractor may be required to furnish, without additional charge, suitable space at landing places for the proper handling and distribution of mails. Accredited representatives of the Post Office Department shall be permitted free access to the contractor's landing places, flying equipment, etc., for purposes of inspection, at any time.

18. Contracts or interests therein for mail service cannot be transferred or assigned (39 U. S. Code 444). Service pursuant to this advertisement may be sublet only upon permission of the Postmaster General. Such permission will not be given except for reasons satisfactory to the Postmaster General, and then only for subletting to a subcontractor that can qualify as to ability to perform the service and which is otherwise satisfactory to the Postmaster General, and at rates not less than the contract rates of pay.

19. The contract for the service shall contain the following covenant: "The contractor warrants that it has not employed any person to solicit this contract upon any agreement for a commission, percentage, brokerage or contingent fee. Breach of this warranty shall give the Government the right to annul the contract, or, in its discretion, to deduct from the contract price or consideration the amount of such commission, percentage, brokerage, or contingent fee. This warranty shall not apply to commissions payable by contractors upon contracts or sales secured or made through bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business."

20. Payments for faithful performance of service under any contract that may be awarded hereunder will be made monthly and as soon after the close of each month as satisfactory evidence of performance shall be received and as the accounts can be adjusted and settled.

21. The contractor shall furnish such evidence of the performance of service and in such form as may be prescribed by the Postmaster General.

22. Payments will be based upon statute miles by the shortest distance between the authorized points on the route, as determined by the Postmaster General.

23. No compensation will be allowed for flights not made. However, pay may be allowed for the mileage between authorized landing points on the route between which flights are made in performance of a partially completed flight over the whole route.

24. Deductions from pay may be made for suffering the mails to become wet, damaged, lost or destroyed, or for other delinquencies in service, in the discretion of the Postmaster General; also the contractor shall be answerable in damages to the United States for any loss or damage resulting to the mails or any part thereof by reason of any failure on its part, or its officers, agents, or employees, to exercise due care in the custody, handling or transportation thereof.

25. The Postmaster General in his discretion may impose a fine or fines or other penalties upon the contractor in accordance with the provisions of the Postal Laws and Regulations, and/or annul the contract, for extended delays due to faulty equipment or other avoidable reason; for repeated failures in the performance of service; or for subletting the service or any part thereof without permission of the Postmaster General; or for assigning or transferring the contract; or for combining to prevent others from bidding for the performance of any postal service; or for failure to provide aircraft as specified herein, or for any other default on the part of the contractor in the performance of the contract, and the annulment of the contract shall not impair the right of the United States to claim damages from the contractor for the failures or defaults; provided that the contractor will not be held liable for failure in performance due to laws or decrees of foreign governments, wars, insurrections, riots, strikes, or acts of God.

26. If in the opinion of the Postmaster General the contract rates are too high in view of the operating results of the route, he may from time to time after the initial five-year period of the contract term and after due notice and hearing given the contractor, reduce such rates to rates he may find reasonable, any such reduced rates to be applicable to service during the remainder of the contract term or such portion thereof as the Postmaster General may order. In any such case the contractor shall have the right to continue service at the reduced rates or relinquish the contract.

27. The accepted bidder under this advertisement will be required to execute a formal contract in the form prescribed by the Postmaster General. Such formal contract with a bond of five thousand ($5,000) dollars in connection therewith (which shall be in addition to the bond furnished with the proposal), shall be executed and filed in the Post Office Department within thirty days from the date of the acceptance of the proposal. If the accepted bidder fails to file a properly executed formal contract within the thirty days, it may be declared a failing bidder and proceedings taken accordingly.

28. This advertisement is subject to the provisions of sec. 6 of the act of Congress approved June 16, 1933, as follows:

"Hereafter the Postmaster General shall not award any air mail contract * * * to any individuals, companies, or corporations, which singly or in combination with other individuals, companies, or corporations pay any salary or salary combined with bonus, to any officer, agent, or employee in excess of $17,500. If such individuals, companies, or corporations employ any officer, agent, or employee on a part-time basis, such salary, or salary combined with bonus, shall be reduced in proportion to such part-time employment."

29. This advertisement is issued pursuant to the act of Congress approved March 2, 1929 (39 U. S. C. 465a, 465b, Supp. V). That act is quoted in Section 2244, Postal Laws and Regulations of 1932, which may be seen upon application to any postmaster. Any contract awarded hereunder shall be subject to the provisions of said act affecting foreign air mail contracts and to the Postal Laws and Regulations and postal practices applicable to the contract and service.

30. Proposals in response to this advertisement must be for service as advertised. Proposal forms may be obtained upon application to the Second Assistant Postmaster General, Washington, D.. C.

31. All proposals must be in the form prescribed by the Department and accompanied by a bond in the sum of two hundred thousand ($200,000) dollars, with a surety company that has been approved by the Secretary of the Treasury, as surety. A list of such surety companies may be found on page 67 of the Official Postal Guide for July 1934, a copy of which may be seen upon application to any postmaster. This bond shall be conditioned upon execution of the formal contract and upon performance of the service and undertakings according to contract. In lieu of a surety company bond, bidders may deposit and pledge U. S. securities to the par value of two hundred thousand dollars, in accordance with Department requirements. The Postmaster General in his discretion may accept a substitute bond in the penal sum of one hundred

thousand ($100,000) dollars conditioned upon performance of the service and undertakings according to contract, after satisfactory performance for one year. 32. Bidders and their sureties are urged to acquaint themselves fully with the requirements set forth in this advertisement and with the service to be performed before they assume any liability as bidders or sureties.

33. A proposal altered or incomplete in any of its essential terms can not be considered in connection with bids submitted in proper form, unless in case of alteration it be verified by initials or other memoranda of the parties.

34. When a bid is signed by a corporation it should be accompanied by evidence of the authority of the person signing so to execute the bid on behalf of the company.

35. The maximum rates authorized by law for this class of service is $2 per mile for the specified load and $1 per pound per thousand miles or pro rata thereof for greater or less mileage for mails in excess of the specified load. Bids at a higher rate will not be considered.

36. Bids must state rate per mile for the specified load of not exceeding eight hundred (800) pounds, and a rate per pound per thousand miles for excess mails, such rate for excess mails to bear the ratio of 50 per cent of the rate per mile for the specified load; that is, if a bid is $1 a mile for the specified load, the rate for excess mails must be $0.50 per pound per thousand miles or pro rata thereof for greater or less mileage, etc. (This is necessary in order to determine the low bid.)

37. In addition to the bond, bidders must file the following with their proposals:

(a) A statement of the number and type of aircraft it is proposed to provide (including the number in reserve), and description of each such aircraft, showing date built, pay load, number of meters, horsepower, percentage of motor power necessary to sustain flight at an altitude of 1,000 feet, cruising speed, extent of fuel reserve, passenger capacity, load capacity, safety features, and safety devices; also a certificate from the Department of Commerce that the equipment offered meets its requirements both as to airworthiness and adaptability to the particular service.

(b) An affidavit as to citizenship. (See par. 14 hereof.)

(c) Affidavit of bidder or responsible officer of bidding company covering salary under par. 28 hereof.

(d) A comprehensive statement of the ability of the bidder to perform the service. This will include the financial condition, the past experience in aviation of the bidder or of the executive and operating personnel of the bidder, the number and character of the present equipment owned, and other particulars tending to show ability to perform the service.

38. No withdrawal of a proposal will be allowed unless notice of withdrawal is received at least twenty-four (24) hours previous to the expiration of the time fixed herein for receiving bids.

39. The Postmaster General reserves the right to reject any or all bids.

40. Bids should be forwarded in time to reach the Office of the Second Assistant Postmaster General not later than the time stated in this advertisement for receiving bids. Bids received after that time will not be considered in competition with bids received within the prescribed time.

41. Decision as to award of contract will be announced as soon as practicable after the close of this advertisement.

42. Bids should be sent in sealed envelopes, superscribed "Air Mail Proposal, Foreign Air Mail Route No. 14", and addressed to the Second Assistant Postmaster General, Post Office Department, Washington, D. C.

ORDER NO. 7592

JAMES A. FARLEY,
Postmaster General.

POST OFFICE DEPARTMENT,
Washington, August 8, 1935.

The Postal Laws and Regulations is amended so as to add Section 22442, as follows:

The Postmaster General may discontinue or curtail the service on any foreign air mail route in whole or in part whenever the public interest, in his judgment, shall require such discontinuance or curtailment for any cause,

after giving the contractor a hearing upon such proposed discontinuance or curtailment of service; and any such order of discontinuance or curtailment shall become effective only after such notice and opportunity for hearing, and after 6 months from the date of the original notice to such contractor. In case service on such contract is suspended or curtailed, the contractor shall be allowed, as full indemnity, one month's extra pay on the amount of service dispensed with and a pro rata compensation for the amount of service retained and continued.

JAMES A. FARLEY,
Postmaster General.

FOREIGN MAIL, MERCHANT MARINE ACT

Senator MCKELLAR. Now, as to the item on page 60, $26,500,000, I would like for you to make a statement showing what contracts have been canceled and why, and what has been done in reference to the report of the Postmaster General recommending the cancelation of others, and whether the Department is going to undertake to cancel the others.

Mr. BRANCH. Senator, I think we will have to ask you to indulge us to the extent of permitting us to get you the figures and the facts that you request.

Senator MCKELLAR. Why, of course.

Mr. BRANCH. I might make this statement about it, that as Mr. Donaldson explained a moment ago, we are asking for a considerable amount less on that item than we asked for last year. Is that not correct, Mr. Donaldson?

Mr. DONALDSON. That is right.

Mr. BRANCH. That has been brought about largely through the savings we have effected.

Senator MCKELLAR. You mean the difference between $28,850,000 that you had last year?

Mr. BRANCH. Yes, sir.

Senator MCKELLAR (continuing). And the $26,500,000 that you have asked for this year?

Mr. BRANCH. Yes, sir.

Senator MCKELLAR. Well now, can you point out exactly how that saving of $2,350,000 has come about?

Mr. BRANCH. We may have that here. Have you got that, Mr. Donaldson?

Mr. DONALDSON. No, sir. I cannot give it definitely, Senator, because the savings are all estimated through the remainder of the life of the contracts. In other words, all of the estimated savings effected run through for the remainder of the contract terms, but the appropriation of $28,850,000 for 1936 was approximately $3,000,000 less than what the contracts called for, if full performance were given. It was just merely arbitrarily reduced from about $33,000,000 to $28,850,000, hoping that we could come within that amount, and that cancelations of sailings would result in a saving. In other words, less than full performance of contracts, together with the saving we have effected administratively, would perhaps justify an appropriation of not exceeding $26,500,000, and we do not know at this time whether that appropriation will be too much or not enough. If we have full performance under all of the contracts, the cost would be approximately $33,000,000.