Senator PROXMIRE. Mr. Eno, do you have any judgment on that? Mr. Eno. My opinion on that, Senator, is that if you are working in an area where the consequences are uncomfortable and you are getting nose bleeds and eye irritations and things of that nature, you are certainly not going to produce at your maximum level and, therefore, productivity again is reflected-reduction in productivity would be reflected.

When you have all this together, that is where you get the problem, all the things we brought up today. It might sound like minimum use in some areas, but when you multiply them by the number of employees and the number of man-hours worked, it becomes a considerable cost when you consider these men are making $7 or $8 an hour.

Senator PROXMIRE. Mr. Eno mentioned harassment of the workers. Can you give us an example of the harassment taking place?

Mr. CAMARA. Yes, employees are required, if going to a vending machine or the restroom, to carry the tool with them, whether they work on a machine where they wouldn't carry a tool or not. An employee is required, before going to a restroom, to have a supervisor sign his timecard.

Since October of 1977, discipline has really run rampant in the yard. They discharge people for no good cause whatsoever. One incident that comes to mind is: One employee was noticed leaving the yard at 3:30, at the end of his normal work shift, and he was walking in a irregular manner, and the yard superintendent on the second shift immediately had him fired-immediately, on the spot. The next day they found out that the man had a handicap and that is the reason he walked the way he did.

Senator PROXMIRE. Was he rehired?

Mr. CAMARA. Yes, but he was never apologized to, and he was told if he pursued the matter, the discharge would be maintained. I could go on and on and on as far as harassment.

Senator PROXMIRE. One of the most striking examples of loss of time and productivity which concerns the staff was that employees had to obtain written passes to go to the restroom, and then when they would get there, they often must wait in long lines because of the inadequate facilities. Instead of working, they were waiting in line to go to the restroom. Is that "restaurant" or "restrooms"?

Mr. CAMARA. The restrooms. The restrooms have always been inadequate.

Senator PROXMIRE. How much time would you say was lost by an employee in a typical day, a half-hour or an hour?

Mr. CAMARA. Waiting to go to the restroom?

Senator PROXMIRE. Yes.

Mr. CAMARA. Fifteen minutes in the whole day.

Senator PROXMIRE. Then it is a matter of a nuisance, and one of the elements that Mr. Eno pointed to as a lack of morale, that they didn't have adequate restroom facilities?

Mr. CAMARA. Yes.

Senator PROXMIRE. I understand there was a recent rebellion of the female workers over the lack of adequate restroom facilities. Can you comment on that?

Mr. CAMARA. Yes. When the women were hired, they put in trailers, and put them in the yard. The yard covers maybe half a mile, and they probably put three or four trailers scattered through the yard and these were all the restrooms available to women employees. It did make it frustrating.

Senator PROXMIRE. What did the rebellion amount to?

Mr. CAMARA. Some women locked themselves in a men's restroom and held out for a couple of hours until they got their own. Senator PROXMIRE. That has been corrected?

Mr. CAMARA. Please?

Senator PROXMIRE. Has this been corrected?

Mr. CAMARA. No; there are not adequate facilities in the whole yard. Senator PROXMIRE. I am talking about women now.

Mr. CAMARA. There aren't adequate facilities for women or men in the yard.

Senator PROXMIRE. There are not?

Mr. CAMARA. No.

Senator PROXMIRE. I understand in one area servicing a thousand workers there are only six toilets. Is that right?

Mr. CAMARA. That is the information that has been brought to me, yes.

Senator PROXMIRE. Mr. Eno, what do you mean by the term "Bolwarism" and

Mr. ENO. One of the first lessons you learn studying labor relations is the history of labor and how negotiations have gone on through the years, and one of the classic examples which has now become. part of the idiomatic language of the professors of labor relations, Bolwarism. Mr. Bolwar was vice president of industrial relations for the General Electric Corp. for many, many years. He was very successful in that he compiled a complete contract for each negotiation, and laid it on the table and said: "Gentlemen, this is your contract, sign it," and walked out of the room.

For many years the employees of General Electric were subjected to Mr. Bolwar's take-it-or-leave-it attitude, and it was successful. Two or three years ago, the Supreme Court in a ruling on the National Labor Relations Board case ruled that illegal. The term "Bolwarism" is still used by labor relations people to indicate a type of management practice of "Take it or leave it, we are not going to do anything else about it." This is what has taken place at Electric Boat at the present time.

Senator PROXMIRE. The other part of my question is: How do you explain the policy of harassment and intimidation?

Mr. ENO. I explain it as one of a fear complex. I had occasion yesterday, since my statement came in, of meeting a gentleman who rode in my carpool and lived next door to me for the first couple of years, and he said: "I am afraid to talk to you, so let's go in the back part of the room and sit and talk."

When a man who is a retired Navy chief and has worked for 12 years for Electric Boat as one of their supervisors and one of their interviewers tells you that when he, and all the other employees— he is in a position to know because he interviews and talks to all people when they leave the company in the final interview. I am talking now about management people, and also when they are hired. He does a lot of the hiring and interviewing for that.

When he tells you that: "You don't know when you come in to work," and not just himself, but everyone else: "In the morning whether you will last the day. When 5 o'clock comes, you say amen, I made it again."

This is the general attitude. I meet these people socially and politically in Groton. You can tell they have aged and changed because of this constant pressure. You cannot work anywhere with a threat over your head, that when you come in to work in the morning you may not last to the end of the day.

Senator PROXMIRE. How can you explain such a counterproductive policy? This is a big company.

Senator Weicker says they produce a remarkably fine product. You said the man who runs the company now is a brilliant shipbuilder. How can you explain that the people of this kind would engage in such a counterproductive policy?

Mr. ENO. One of the talents that people sometimes don't have in life is how to handle people. They have certain procedures set up, and you do it their way, or you do it that way, or you quit. Mr. Veliotis is that kind of man, but handling people and hiring the people to handle people is where he has failed.

Senator PROXMIRE. I can't understand that. That is the essence of management. That is like saying this man is a marvelous ballplayer. He can't hit, field or run, but he is a terrific ballplayer.

That is the heart of it, handling people. An executive has to pick people who can do the job, and see that they do the job, and make sure that their attitude while they are working is such that they are constructive and working all the time.

Mr. ENO. But you don't do it by threat.

Senator PROXMIRE. Then what did you mean that he was a brilliant success?

Mr. ENO. He came from the Davie Shipyard in Canada, and took a shipyard that hadn't made a penny of money since it was built by Bethlehem Steel, and that was the Quincy Shipyard. He fired practically the whole shipyard and gradually rebuilt it. He works on the principle that if he can bulldoze

Senator PROXMIRE. They made money after he did this?

Mr. ENO. As a stockholder of General Dynamics, by the way, I got my first quarterly report to the shareholders from Mr. Lewis. The company is doing tremendously well. I would like to give you this copy. I think it would be interesting and should be put into the record.

It shows their statement of how they are reporting to the stockholders on the Navy cost overrun problem, where they are making money. They have not paid a dividend, however, on their stock since 1970.

Senator PROXMIRE. The bottom line for the Federal Government is, you know, they are late in their production and the cost is fantastic. If we didn't bail these fellows out in some kind of a settlement on their claims, they would really be sinking.

Mr. ENO. Rather than read this pamphlet, I think, and this is signed by Mr. Lewis, where he says:

We are doing tremendously well. In 1977, earnings again reached record levels, and we were nearly five times greater than the earnings of several years ago.

Senator PROXMIRE. Well, I want to thank you gentlemen very, very much. You have been excellent witnesses and it is a sad story that you tell, but you tell it very vividly and honestly, and we appreciate very much this testimony. I think it helps us get a much better understanding of the productivity problems involved with Electric Boat-and new insight.

Thank you.

Mr. ENO. Thank you, Senator.

Senator PROXMIRE. Our final witness this morning is Vice Adm. C. R. Bryan, commander, Naval Sea Systems Command, and colleagues.

STATEMENT OF VICE ADM. C. R. BRYAN, USN, COMMANDER, NAVAL SEA SYSTEMS COMMAND, ACCOMPANIED BY REAR ADM. F. F. MANGANARO, USN, CHAIRMAN OF NAVY CLAIMS SETTLEMENT BOARD, NAVAL MATERIAL COMMAND; REAR ADM. J. H. WEBBER, USN, DEPUTY COMMANDER, SUBMARINE DIRECTORATE, NAVAL SEA SYSTEMS COMMAND; AND ROBERT STOREY, ASSISTANT DIVISION DIRECTOR, SCN APPROPRIATION DIVISION, NAVAL SEA SYSTEMS COMMAND

Admiral BRYAN. Good morning, Mr. Chairman.

I have Admiral Manganaro, Admiral Webber, and Robert Storey accompanying me.

Senator PROXMIRE. We are happy to have you.

Go ahead with your statement.

Admiral BRYAN. I apologize in that I am in the process, apparently, of losing my fight with laryngitis.

Senator PROXMIRE. You sound good now. Pull the microphone over and go ahead.

Admiral BRYAN. Mr. Chairman, I am pleased to appear before this committee in response to your request to discuss in general the claims filed by Electric Boat Division of General Dynamics, and in particular the problems experienced at Electric Boat in buildup of manpower and recruiting of skilled workers, productivity trends, and drawing revisions and contract changes. In addition, I am prepared to review relative costs of building SSN-688-class submarines at Electric Boat and Newport News.

In January 1971, Electric Boat Division, General Dynamics Corp., was awarded a contract for seven 688-class submarines. At present, two of the seven ships have been delivered to the Navy. In October 1973, Electric Boat was awarded a second contract for 11 SSN-688class submarines. Electric Boat was awarded the Trident contract for a lead ship plus three follow ships in July 1974. The Trident contract was amended in June 1977 to include a fifth ship plus an option for the sixth and seventh ships. On February 27, 1978, the option for the sixth and seventh Tridents was exercised. The current workload at Electric Boat is 16 SSN-688 and 5 Trident submarines which are in various stages of construction, plus the 2 Tridents whose contracts have just been awarded.

CLAIMS

On the claims issue, two substantial items should be mentioned. First, the initial claim was submitted on February 14, 1975, against the first SSN-688-class contract. The principal basis of that claim was that the defective and late Government-furnished design data, data which were principally prepared by Newport News, resulted in ship delivery extensions and additions work not covered by the original pricing. The claimed amount was approximately a $232-million increase in ceiling price. The claim was settled on April 7, 1976, for a $97-million increase in ceiling price. As a part of that action, Electric Boat Division agreed that all Government responsible actions or inactions relative to the first SSN-688 contract prior to May 20, 1975, were covered completely by this claim settlement.

Second, on December 2, 1976, Electric Boat Division submitted a second claim under their first 688 contract for actions after May 20, 1975, and also submitted a claim against their second contract for SSN-688's. These claims were for an increase in ceiling price of $543.9 million for the two contracts. These claims have been assigned to the Navy Claims Settlement Board, and Admiral Manganaro, who heads this board, is with me today and can discuss the claims, as you may desire, sir."

DRAWING REVISIONS AND CHANGES

I would like to talk about the issue of drawing revisions. I would like to discuss allegations that have been made regarding ship design changes or things that have been represented to the press and the public as design changes.

One press account stated that the Navy ordered 35,000 revisions for the 688 class at Electric Boat after it signed contracts for building the ships, and clearly implied the shipbuilder was expected to pay for an imputed massive change to the ships.

I know you, Mr. Chairman, the Congress, and the public were understandably shocked by such allegations. I personally believe such allegations are not only inaccurate, but are very misleading. A naval warship is an extremely complex thing to conceive, to design, and to build. In the course of development of the design, after the Navy prepares the contract plans and specifications for shipbuilders to bid on, the actual preparation of the thousands of construction blueprints are assigned to a design agent. In many cases, this is also the builder of the lead ship. In other cases, the builder of the lead ship may hire his own naval architect to prepare the blueprints or drawings.

The Navy provides the other shipbuilders these same design drawings for their use in constructing follow ships when more than one shipbuilder is involved in the program.

One ramification of this practice is that, even though the thousands of detailed construction drawings actually are prepared by the lead shipbuilder-since they are done under a Navy contract-they are viewed as Government-furnished drawings by the follow builders.

These drawings serve a number of purposes. Principally, they are the method by which the engineers and technicians tell the workmen