1941, the United States Army and Navy had only enough airplanes to furnish skeleton forces with equipment, a great deal of which was of inferior quality. The report states

There seems little reason to analyze the facts by which this conclusion was reached prior to the war, since the events of the last few weeks have demonstrated its truth beyond reasonable doubt. Not only has it been shown that we have not had a great quantity of planes in action, but information made available to the public demonstrates that too many of the ships used were of types long considered by our armed forces to be obsolete.

The report goes on to say

After 2 years of frantic effort, we have too few planes to allow adequate flying time to our pilots.

It may be claimed that this shortage existed with our own forces as the result of huge shipments diverted to foreign consumers. Actually, the facts do not indicate that to be the case. Information made available to the public has shown that, of the best types, our shipments abroad have been very limited.

STATEMENTS IN TRUMAN COMMITTEE REPORT-CHANGES IN SPECIFICATIONS

Some of the aircraft manufacturers, it appears complained that they had no sooner gotten into production when changes were made in the specifications. In one specific case, it appears that 165 planes were held up for something to be done to the carburetor, which should have been taken care of in the first place. I would like to ask about that, because that is one of the most severe criticisms affecting the policy. When your planes are to go into production, what is the policy in reference to anticipated improvements or accessories which may be added to the planes at some future time?

General ARNOLD. Our plane policy with reference to production is to standardize on everything before we go into production. With that in mind, as early as 1938 we had a standardization committee under which we standardized with the Navy so that changes in certain parts and processes could be made from Army planes to Navy planes. Since the British have come into the picture, we have standardized with the American-made British planes, so the same planes could be diverted either to or from the British, the Army, and the Navy. We then standardized on bombs as far as we could. We standardized on attachments of all kinds. We standardized, for instance, on bomb racks wherever we could. We even tried to standardize on radio, but there we ran into exceedingly great difficulties. With the standards that are in effect, the airplanes roll down the line as rapidly as possible. The only changes that we ever made in airplanes when they had started rolling were changes involving life and death, or something which would lead to life or death. For instance, the Truman committee talked about "piddling changes in carburetors," but that same piddling change in our carburetor was to correct something that probably caused a forced landing, with the death of eight or nine people. That is what they call a piddling change. Any change we might make in a carburetor might be called a piddling change, but it involves the matter of saving life.

The CHAIRMAN. Is it your statement that any delays occurring to plane production are not due to a desire to inaugurate later types of improvement or equipment?

General ARNOLD. Insofar as we can do it, changes are deferred so they will not interfere with production. We cannot always do that, but that is the policy we follow wherever we can.

STATEMENTS IN TRUMAN COMMITTEE REPORT-CONCENTRATION OF ORDERS WITH A FEW MANUFACTURERS

The CHAIRMAN. The further charge is made in the report that orders have been concentrated with a few companies. The statement is made that billions of dollars of orders have been placed with 19 aircraft manufacturers, while there are more than 60 aircraft companies in the country today which have been unable so far to secure any substantial place for themselves in the production of aircraft for national defense. The report states that detailed information is available on more than 50 of these companies, much of which has been verified by the field inspectors of the Civil Aeronautics Administration. It is stated that they have detailed information on more than 50 of those concerns, most of which are offering to build airplanes.

The report states that these companies have machinery, space, and the men with which, it has been estimated, they can produce a minimum of 2,000 airplanes per month. In view of that, how do you account for the fact that while there have been some 60 companies available for this work, in awarding the contracts, they have been limited to only 19 concerns?

General ARNOLD. There are other people here who are far better qualified to answer as to the production problem than I am. You have General Knudsen here and Under Secretary of War Patterson. General Echols is very closely concerned with production. So far as our policy is concerned, we have utilized every known facility in the United States for production that can produce either whole airplanes or engines, or any of their component parts. So far as I know, we utilize all of those facilities in the manufacture of planes or parts. However, we cannot just go out and take a company because they say they are ready to manufacture pursuit planes. We cannot give them orders because they make that claim, because we have found from bitter experience that there is a big difference between the desire to produce and the actual capability to produce.

The CHAIRMAN. Right in that connection, the report of the Truman committee also says that responsibility for the condition is to be placed directly on the Army and Navy. They state that they still retain control over the awarding of contracts and consider the O. P. M. as a sort of vexatious necessity.

General ARNOLD. I would like to have General Echols answer that question.

General ECHOLS. I would like to answer the first question first: It was stated that there were 60 manufacturers. I have not seen the list, but I read that extract from the report.

The CHAIRMAN. You are referring to the list provided by the Civil Aeronautics Authority?

General ECHOLS. Yes, sir. The statement is made that we have let contracts to only 19 manufacturers, while there are 60 other manufacturers capable of turning out 2,000 planes per month. Those 60

manufacturers have, in general, been manufacturing very small training airplanes, but they have had no experience in manufacturing big airplanes. They do not have the necessary engineering staffs, and they were not considered capable of manufacturing the types of airplanes we desired. We are using all available manufacturers who are willing and able to manufacture tactical airplanes. There are 1 or 2 manufacturers that were named there, or listed, who have rather bad performance records. They were never up on deliveries, and their managements were continually squabbling. They have been hiring and firing managers, and they were simply not able to put out the product. Therefore, it seemed unwise in the emergency to go to air unreliable concern and place millions of dollars in contracts when they could not complete them. There is another important thing to be considered in connection with the whole program, and that is that we have tried to reduce the types and models. Every manufacturer that comes in wants to build a complete airplane and put his name on it. With these small manufacturers we have had a considerable amount of difficulty in getting an acceptance of subcontracting when we needed them. There is a great deal of difficulty in getting them to join up and accept subcontracts, because they want to build complete airplanes of their own, in order to have their names on the airplanes.

COORDINATION OF PROCUREMENT

The CHAIRMAN. What arrangements are now being made whereby the Army and Navy are cooperating with the Office of Production Management for some centralization and standardization in the matter of letting contracts? Is there complete understanding between those different branches?

General ECHOLS. I do not understand the allegation of the committee that there has been a lack of understanding with regard to the placing of contracts and on the matter of standardization. The committee states, for instance, that the Army had no plan. Back in 1940, representatives of the O. P. M., the Army, and the Navy made a production plan. The questions who could build airplanes, where they would go, and what facilities were available were all considered. The result of the joint effort was a plan made by the Army, Navy, and Office of Production Management. The procurement problem was to be worked out by them together.

The CHAIRMAN. The statement in the report of the Truman committee is this:

Though it was seemingly created to organize and manage production facilities, it appears that, as far as aircraft production is concerned, the Office of Production Management simply acted as a rubber stamp for the service agencies, allowing them to follow their own policies of procurement.

General ECHOLS. The only answer I can make to that is that I feel certain that the committee did not investigate far enough into the question of what the manufacturers had to offer, and the result of the efforts at cooperative development, particularly for the Army and Navy, through the Aeronautical Board in the matter of development work. It is not a case of taking what manufacturers have to offer. We have been constantly working on the development of experimental airplanes over a long period of years, and the airplanes we have today

are the result of the experimental work we did prior to 1940. It took several years to get those experimental airplanes into production. When the time for production came, we had to take what had been developed, or else we would be starting all over again.

Mr. POWERS. General Echols, the heads of the Air Corps have come before the War Department subcommittee year after year pleading for money for research and development, but we never got around to the point of giving them enough for that purpose until 1939, when, I believe, we gave them ten or twenty million dollars. That ten or twenty million dollars given them, I think, is in some way responsible for some of the fine ships that you have flying today.

General ECHOLS. Yes, sir.

The CHAIRMAN. Is there anything further on that point, General? General ECHOLS. One thing more: I would like to say, briefly, this: As to the lack of cooperation between the Army Air Corps, the Navy Bureau of Aeronautics, and the O. P. M., the production programs have been made up, as stated, as the result of cooperation between those organizations. Our services place contracts, but the question of the number of airplanes that a certain given manufacturer can produce is determined jointly by the Army, Navy, and O. P. M. Those manufacturers are called in and asked if they can meet the program. If they believe they can, the contract is then written by the Army or Navy.

AIRPLANE PROGRAM IN THE PRESIDENT'S ANNUAL MESSAGE

The CHAIRMAN. You have given us the number of planes in the program, and I take it for granted that they are intended to meet the goal set by the President. To refresh your memory on that, I will read from the President's message of January 6, which sets the objective toward which we are striving:

To increase our production rate of airplanes so rapidly that in this year, 1942, we shall produce 60,000 planes, 10,000 more than the goal set a year and a half ago. This includes 45,000 combat planes-bombers, dive bombers, pursuit planes. The rate of increase will be continued, so that next year, 1943, we shall produce 125,000 airplanes, including 100,000 combat planes.

I take it for granted that the President spoke of both the Army and Navy there, and that your plan or program ties in with the general program for the production of the number of planes indicated by the President in his message.

General ARNOLD. The number that we are asking for here does not meet that. The program, we are asking for here with the exception of the heavy bombers simply carries us on at the present rate of production so we will not fall back in production in the latter part of the present year.

The CHAIRMAN. You are not quite up with the President's goal? General ARNOLD. No, sir.

The CHAIRMAN. Is that because you find that it is impossible to do so?

General ARNOLD. We have under way in the War Department plans that are being prepared to meet the President's goal. This present request for funds was made before the President's message.

The CHAIRMAN. This is a preliminary step in that direction, to enable you eventually to meet the President's request?

General ARNOLD. It is a step that will aid materially in meeting the President's production goal, but not quite.

The CHAIRMAN. Of course, you will have to let contracts to meet the program requested by the President, and you have to have funds and authorizations in order to do that. Would you require all cash, or could some of it be covered by a contract authorization?

General ARNOLD. Some of it could be taken care of by contract authorization. I do not know how much should be in cash. I think about 30 percent could be covered by authorization.

The CHAIRMAN. Of course, that is all in the future,

General ARNOLD. I am only talking about this estimate.

The CHAIRMAN. When should the funds be made available so as to enable you to let the contracts?

General ARNOLD. Just as soon as we can get them. It takes 6 months to get the raw materials. They have to have their orders out for the raw materials.

The CHAIRMAN. Is it necessary to make advances to these manufacturers?

General ARNOLD. In most instances we have made advances to manufacturers.

The CHAIRMAN. You do not know whether in the future it will be increasingly necessary to do that?

General ARNOLD. Yes, sir. I am certain that advances will be necessary in many cases.

NATURE OF CONTRACTS TO BE LET

The CHAIRMAN. What will be the nature of the contracts used in getting this production?

General ECHOLS. We are using the fixed-price and the cost-plusfixed-fee contract.

The CHAIRMAN. Do you consider that the most practical way? How does the cost-per-unit plan compare with this plan or the plan used heretofore?

General ECHOLS. It has been rather difficult to determine. For instance, we have difficulty with the manufacturer who has never manufactured airplanes or the type of model of airplane we require. He asks for a cost-plus-a-fixed-fee contract because he is unable to figure the cost. For instance, Mr. Ford, in the manufacture of engines, was unable to determine the cost, and for that reason he was given a costplus-a-fixed-fee contract. I am unable to make a statement as to whether the cost-plus-a-fixed-fee contract is more expensive than the fixed-price contract.

The CHAIRMAN. Do you not think that should be determined, in view of the tremendous task ahead of you?

General ECHOLS. We are trying to determine that as rapidly as we can, but we have not gone far enough along in the program to get any accurate basis.

The CHAIRMAN. Is this a cost-plus-fixed-fee contract, or a cost-plus contract?

General ECHOLS. A cost-plus-fixed-fee contract.