Mr. FLOETE. His suggestion, of course, was that we should have some type of continuing review of funded contracts, and we heartily agree with that. But as to the method, we would like to suggest for your consideration the idea of requiring each of the services to give us a list the first of each quarter of the contracts which they intend to put under advertisement during that quarter. Then we would review them prior to the date of advertisement and make final decision at that time. In the meantime, we will have been reviewing these things constantly, but we will get the final check before they let the contract which, to us, is the important time to get it. There is no use looking at it after it is all done and is a past event. Mr. DAVIS. I think we will agree with that as a last resort review, but I certainly feel it is necessary for your division to make an overall review of all outstanding appropriations as against line items, so that you will be able to present a summary that to yourself and to those of us charged with providing the money would indicate which of those can be considered obsolete and which you feel will no longer need to be done. What we are trying to do is to tie the spending of money that has been appropriated to specific line items so that we know where it is allocated and where it is not. We are trying to get away from this pool of floating money which appears to be in the public-works program. Mr. FLOETE. You mean the same kind of action we are proposing on the authorized but not appropriated? Mr. DAVIS. Right. That will take you a long time, I appreciate. Admiral JELLEY. As a matter of fact, that was our first thought, but, as you say, it would take a long time, and the important thing to do is to get the services to say today what contracts they anticipate advertising in December. Mr. FLOETE. For instance, here is a huge amount of money. They want to know how much of this amount we can squeeze out; how much we will not need. Admiral JELLEY. I think the logical thing to do is to make an overall survey first. Perhaps it should be combined Mr. DAVIS. Is it possible for you to be working on this thing day to day and have another group who are doing that overall survey, so that we could have some of that? Admiral JELLEY. We would make the services do the overall survey. In other words, we are going to put the burden of compiling the figures by line items on the services, not on us. Mr. FLOETE. I think we should do both of them. Admiral JELLEY. It is a tremendous amount of work-$3 billion. Mr. FLOETE. I know. Admiral JELLEY. $3 billion appropriated and unobligated. Mr. HAND. The question should not only be what contracts do you intend to let during this coming quarter of the fiscal year, but something along this line. The Appropriations Committee gave you $345,000 for X project during the last fiscal year or maybe the fiscal year before that. Nothing has been done. What are you going to do? Are you going to do something with it? Is it still needed? Do you still think it is actually needed? Something of that type, in addition to the things you intend to contract, the things that are lying dead entirely. Admiral JELLEY. It is pretty hard to justify a project today that was appropriated for in 1951 on the basis that it was urgently needed. Mr. HAND. That is right. Admiral JELLEY. That it was thought it was urgently needed in 1951 and yet they have not started on it. Mr. HAND. Time and time again we look at a project and see against it the fact that no start whatever has been made. Despite the fact it was authorized, in some cases years ago, nothing has been done, and the question quite naturally arises, "Is this really needed?" If it is not, let us rescind the authorization and the appropriation. Mr. FLOETE. We will do just that. We will do it as to both. Mr. DAVIS. You inherited an immense problem, and we have inherited it from you. As you go back to September 1951, I can recall even before that, in the fall of 1950, that a lump-sum appropriation was made for public-works construction. Even the people who were going to build at that time did not know what they were going to build, so you have that kind of money. Mr. FLOETE. That is right. Mr. DAVIS. Then in the fall of 1951, I think in 10 days, there were I do not know how many billions and fractions of billions cleared in committee in a matter that was considered an urgent necessity, and last year we had to use what we called the grid system in limiting the line item appropriations because of what was considered an urgent matter. The committee agreed it was not the time to do it. So that we have all that to catch up on. Admiral JELLEY. $3 billion, I suppose, would probably be 2,000 individual items. But while we are getting that study under way and making it, I think at the same time we ought to be watching the end of the line as to the projects ready to be bid. REVIEW OF 1954 PROGRAM Mr. DAVIS. You told us at the beginning of your presentation, Mr. Floete, of the review in your office in the course of the last couple of weeks relating to the presentations that are to be made within the next couple of weeks before this subcommittee. Can you tell us what general review has been made of those three programs since the time that the items were authorized by the Congress in July? Mr. FLOETE. You are speaking of the present 1954 program? Mr. DAVIS. Yes. Mr. FLOETE. As to the Army and Navy, we have been over them. Admiral JELLEY. The Army and Navy have made reviews, but I do not know about the Air Force. General Carter told me the Army had made one, and I know the Navy made a complete review. Mr. FLOETE. We completed that Tuesday night. us. Admiral JELLEY. That was made in the Navy before it was sent to Mr. FLOETE. Yes; but he is talking about what we did. We have reviewed each of those projects, and we think the need has been established heretofore. We are not satisfied with that review we made because of the limited time we had, and we would not propose to have another review exactly like it. We have done this under the circumstances. As we told you, we have deferred at least 11 projects for the Army, the same for the Navy, and there probably will be more than that for the Air Force, although we have not had that up until this morning. Mr. DAVIS. I think we can make this understanding with you. We will be in session here at least through next week. If in the course of that time there are some of those items you have deferred because you do not feel you have the information you want, you may feel free to clear those and we will handle them before we do wind up our hearings, though we may have completed that particular branch of the service. Mr. FLOETE. We will keep right at it. Mr. DAVIS. I would assume from what you have said, then, that these justifications we will be working with-and we have them for the Army and Navy, I understand, that are available to us—would not reflect the review that has taken place in your office in the last couple of weeks. Is that correct? Mr. FLOETE. No. We reviewed those. Mr. DAVIS. But there will be some of those things that still appear in the justifications that have been deferred in your office. Mr. FLOETE. That is right. Mr. DAVIS. And, as of this moment, are not properly before this committee. Mr. FLOETE. We have notified each of the services we are deferring these particular ones. I suppose they will just eliminate them from your consideration. Is that the procedure?" Mr. DAVIS. Would you furnish us sometime today, if you can, with a list of those line items which were presented to you by the Army and Navy but which your office deferred? (The matter referred to follows:) NOVEMBER 11, 1953. Memorandum for the Secretary of the Army. Subject: Fiscal year 1954 military construction, Army appropriation request. 1. Reference is made to memorandum dated September 9, 1953, requesting that the concurrence of the Secretary of Defense be obtained prior to presentation of items in the military construction, Army program to the congressional Appropriations Committees pursuant to section 803, Public Law 207, 83d Congress. 2. A list of items proposed for presentation to the House Appropriations Committee in accordance with the above has been received informally from the Department of the Army dated November 2, 1953. These items have been reviewed and are approved for presentation, excepting in the following instances where concurrence is withheld pending further justification as indicated: Red River Arsenal: Ammunition renovation facility---- $1,378, 000 Further support of immediate need desired with statements as to relationship with first increment facilities in fiscal year 1952 MCA program and any proposed similar facilities in fiscal year 1955 budget estimates. Data also desired to support need on phasing of current ammunition production and present ammunition storage level. Kings Bay, Ga.: Ammunition loading terminal_. $14,814,000 Further justification desired in reation to presently available facilities, work underway at Wilmington, N. C., and future programing of outloading facilities. In view of long-range commitment to this location and magnitude of contemplated investment, a careful and thorough analysis of all attendant factors leading to selection is indicated. Analysis should consider all aspects, including among others, labor availability and rates, railroads, annual maintenance costs, maintenance dredging, necessity for jetties, and real estate. Fort Wadsworth: Engineer field-maintenance shop---- $342,000 Additional investigation desired as to feasibility of utilizing commercial facilities to alleviate workload now placed on repair shops at New York port of em barkation. Comment also desired regarding future status of AAA units in New York area, considering replacement with Nike. Fort Benning: Hangar (light aircraft) $152, 000 Necessity except for minimum repair accommodations is not clear. Further support of this requirement requested in view of possible precedent to future construction of this type. Fort Benning: Main road to warehouse area_ $251, 000 Economic analysis desired regarding possible alternate solution, such as relocating existing construction. Data also desired as to volume of truck and other traffic and size of warehouse area, together with any other information which would justify the proposed expenditure from an economic standpoint. Camp Polk: Acquisition of Fullerton Triangle (1,260 acres)‒‒‒‒‒‒‒‒‒‒ $67,000 Further supporting information requested concerning future status of Camp Polk and continuing need for this item in the light of future strengths and training programs of the Department of the Army. Ladd Air Force Base: Two organizational maintenance shops------ $1,211,000 64 family quarters. 179 family quarters. 35 family quarters- 15 family quarters- $1,319, 000 3,687, 000 851, 000 309, 000 In view of the contemplated expenditure of over $6 million, further investigation and study is desired into alternative means of satisfying this requirement, such as reducing standards of construction or scope. 3. Arrangements will be made to present the above listed projects to the Committee during the hearings beginning 12 November 1953 if the additional justification necessary to support their need can be furnished in time to permit review and clearance before the hearings close. FRANKLIN G. FLOETE. NOVEMBER 11, 1953. Memorandum for the Secretary of the Navy. Subject: Navy authorized public works construction proposed fiscal year 1954 funding. 1. Reference is made to your letter of November 5, 1953, which submitted for concurrence, the Navy's public works construction program for fiscal year 1954 not yet cleared by the congressional committees. 2. The proposed projects have been reviewed and are approved for presentation to the House Appropriations Committee, except in the following instances where concurrence is withheld pending further justification by the Department of the Navy: Defer until agreement is reached between city and Navy and price determined. Defer until land acquisition program has been determined. $1, 187, 000 $55,000 NAS, Pensacola, Fla.: Land acquisition, 200 acres. $30,000 Defer pending determination of sites for the additional water wells. NHMC, Bethesda, Md.: Addition to Medical Research Laboratory. $726,000 Need for expansion of facilities at this time not sufficiently demonstrated. Camp Lejeune, N. C.: Ramps and piers_‒‒‒‒ $800,000 Defer pending further study of the entire project including channel and jetties. NSD, Newport, R. I.: Construction of additional covered storage is disapproved in view of commercial facilities available within a radius of 20 miles from Newport. Classified locations: Land acquisition 96 acres. $275,000 This estimate should be reduced to $50,000 which appears to be a more reasonable estimate for the proposed acquisition. Chase Feld, Tex.: Fuel dispensing facilities- NAAS, Kingsville, Tex.: Fuel dispensing facilities____. Defer these fuel dispensing facilities projects pending further study. $175,000 517, 000 400,000 3. Arrangements will be made to present the above listed projects to the committee during the hearing beginning November 12, 1953, if additional justification necessary to support their need can be furnished in time to permit review and clearance before the hearings close. FRANKLIN G. FLOETE. BACKGROUND OF SECRETARY FLOETE Mr. DAVIS. Before my colleagues here ask you some further questions, I would like to have you tell us a little more about your background. You have already told us about being in the contracting business in the Middle West. Can you tell us a little more about yourself than that? Mr. FLOETE. Yes, sir. In how much detail do you want this—just a brief biographical and business history? Mr. DAVIS. Yes; I think a brief biographical and business history so that the record will show the background and experience which you have brought to your present position. Mr. FLOETE. I was born in South Dakota, graduated from the University of Wisconsin with an A. B. degree and from Harvard Law School with an LL. B. I never practiced law but immediately went into business. Actually, I did not really get into business until the war came on. I was in the First World War for 2 years, became a battery commander and captain of field artillery and had about a year's service in Europe. Then I returned and went into the retail lumber business, operated a maximum of 26 lumber yards in Iowa and South Dakota. I sold those out. I was a partial owner of them. I sold that company just before the depression hit-not because I thought there was going to be a depression but because I thought we were in a farming community and I felt we had lost our world markets and so forth and that it was going to be tough on farming. It turned out to be tough but for another reason. I had become well acquainted with a group of Chicago bankers, because this lumber company owed them a great deal of money. In fact, it was broke when I went to it. We were able to pay them off and paid the stockholders a very substantial amount above their original investment. So I had achieved some sort of reputation with that group of Chicago bankers. And when they got into trouble with |