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We watch the performance of prime contractors with a view of spotting delays and bottlenecks that possibly could be relieved by farming out that particular part of the work to some of the smaller shops.
Senator JOHNSON of Colorado. Do you have any way of telling the prime contractors to sublet?
Colonel HARE. No; that has been one of the early difficulties in getting this subcontracting started on a broad scale.
The War Department is one of the contracting parties and as such must deal at arm's length with its contractors and must hold that prime contractor responsible for complete performance of all of the elements of his contract.
We have taken the position that if we tell contractor X that he must have the forgings or the machinings done by contractor Y, and there are flaws in the finished product which contractor X is responsible to the Government for, or they are found faulty, that contractor X then says the Government told me to have the work done by contractor Y who made the mistake. He therefore says he is not responsible and his bonding company would take that same position.
Senator Johnson of Colorado. Well, naturally we realize that there will be difficulties in connection with it. There is no question about that.
Have you tried to figure out any way around that responsibility?
Colonel HARE. We have tried to get these large prime contractors to clear the decks of the orders as fast as possible so that they can take other orders which should be attractive to them. In other words, we say that we put the order in the front door and that Mr. Mehornay's organization takes it out at the back door, and farms it out. That allows the War Department to make maximum utilization of this good management and this ability to organize a production job which these big firms have, to make for a maximum utilization of that, and turn over the small details to the little fellows who can handle them.
Senator Hill. Colonel, you said you were survey officer out at Chicago, out in that corps area?
Colonel HARE. Yes, sir,
Senator Hill. I see. You have not been there since 1936? You have not been there during this emergency at all?
Colonel HARE. No, sir.
Senator Hill. I wonder whether you could give us any idea or give us your estimate of what machinery or what plant facilities there might be in that area that could be used for national defense that in not now being used, but since you have not been there since 1936 I do not suppose you know about the situation at this time.
Colonel HARE. No.
Senator KılGORE. Do you make any study of plants of prime contractors when they are bidding on a contract to see whether they have, within their plant, facilities for the completion of the contract within the time limit?
Colonel HARE. My office does not do that, because we do not know of that signed contract until the award is made. However, the purchasing officer, wherever it may be located does investigate the facilities of the private contractor to see whether he is a qualified contractor.
Senator KILGORE. That is what I was getting at. What is the nature and extent of that investigation?
Colonel HARE. Of course there are two investigations made. One is made by the bonding company that is going to guarantee that performance and one is made by the procuring agency.
In both instances the War Department knows a good deal about all of these bidders, because for 20 years we have been making a plant-toplant-survey canvass of industry and of those people whose plants we have surveyed are the plants, by and large, who are getting the larger contracts.
The CHAIRMAN. Well now, the War Department would not award a contract to anybody unless they are reasonably certain, after an investigation, that that contractor is in a position to fulfill the terms of the agreement entered into, will it?
Colonel HARE. We would like to pick our contractors, although the law requires that anyone that can make a performance bond, is a qualified contractor.
The CHAIRMAN. But the War Department does not have to award a contract merely because under the law they are qualified contractors. It is up to the War Department to make the selection, is it not?
Colonel HARE. No.
The CHAIRMAN. But, if they investigate and find that that contractor is not qualified, not qualified to carry out his agreement, certainly the War Department would not give him that contract.
Colonel HARE. We would report that, that we did not believe this man was qualified, and we would recommend that the next lowest bidder would get the award.
The CHAIRMAN. Well, do they follow your recommendations in all instances?
Colonel HARE. So far as I know, not in all instances.
The CHAIRMAN. In any instance that they have not followed your recommendations as to contractors, that is to say, prime contractors, has he fallen down on his agreement?
Colonel HARE. I am not qualified to testify on that point; sir.
The CHAIRMAN. Now, in the case of a contract being made and they are not fulfilling that contract, does your division of the War Department suggest to anybody that they make utilization of subcontractors in order to be able to fulfill the contract?
Colonel HARE. Definitely. That is the policy. We would know that before he got into serious difficulties, because our inspectors in the plants would know that they were beginning to develop little bottlenecks or slowing up.
The CHAIRMAN. Now at that time, you provide that general contractor with information pertaining to where he may secure or procure the services of the subcontractor that will be of benefit to him in fulfilling his contract?
Colonel HARE. Yes. We do when we can and we go one step further. We report to Mr. Mehornay's field organization and they put all of the pressure on that they can to make him use these qualified subcontractors.
The CHAIRMAN. Well, do you know of any instance whereby it would be necessary for the Government to step in and take over the property of somebody else and turn it over to a prime contractor, or to a subcontractor, for that matter, in order that the prime contractor might fulfill his agreement?
Colonel HARE. I know of no specific instance, but I can see where such conditions could exist and, particularly, when the going gets tougher, which we anticipate in the near future.
The CHAIRMAN. Now, do you know of any instances that have occurred in the past where bottlenecks would have been eliminated, had the authority been granted to take the property of somebody and give it to somebody for the fulfillment of the contract?
Colonel HARE. I know of instances where if we had had a certain one tool that we could have increased the production of a vital military item by 25 percent; just one tool.
The CHAIRMAN. One tool?
Colonel HARE. Yes. We tried to get that tool, but we were unable to locate it in the markets.
Senator JOHNSON of Colorado. Does anybody have that tool?
Senator JOHNSON of Colorado. Well, it is a kind of a mystery tool then? Just an imaginary tool?
Colonel HARE. I do not know. I know that such a tool exists as a commercial tool and it is in production somewhere; that it is in plants, but whether it was available or not; whether it could be taken from that plant and put into this one, without seriously interrupting the progress as a whole, I do not know.
The CHAIRMAN. Well now, did not your organization make diligent inquiry as to where that tool was; who was using it, and why you could not get it, if you needed it?
Colonel HARE. The Ordnance Department in this particular case did make diligent search for it.
The CHAIRMAN. Did they find the tool?
The CHAIRMAN. Well, where was the tool? Did anybody ever locate the tool?
Colonel Hare. So far as I know it was not located.
The CHAIRMAN. Who gave them the idea that there was such a tool and the tool was never located?
Colonel HARE. It was a tool that is used; it was a sort of a press tool. The Ordnance Department was acquainted with it.
The CHAIRMAN. Well now, if the Government had the authority that it asked for now they could not have gotten the tool because they could not have located it. So, in that condition, even if this proposed legislation were enacted, it would not have been of any benefit whatsoever, in that particular instance, would it?
Colonel HARE. It is very likely that that tool was in existence, because it was a commercial tool.
The CHAIRMAN. But now, you stated a moment ago that diligent search was made and the tool had never been located.
Now suppose we had enacted this legislation, providing us with requisition authority, it would not have been of any benefit in that instance, because the tool was never located. You have got to locate the tool before you can seize it, have
not? Colonel HARE. By locating the tool, I mean finding one that was available. We do not consider as available a tool that was in a plant in daily use by a manufacturer.
The CHAIRMAN. And consequently if this proposed legislation were enacted, it would not be of any benefit in the instance to which you refer.
Colonel HARE. I would say that if that tool had been located and the manufacturer who owned it stated that it was not available, that we could have seized it under the proposed legislation.
The CHAIRMAN. But you would not have seized it if that manufacturer was making utilization of that tool in defense projects, would you?
Colonel HARE. In the first place, he would be making the decision whether or not it was available. In the latter case we would make the decision as to whether or not it was available.
Senator KilGORE. Let me ask this: From the product that you were expecting to procure from this plant, and the specifications, was it possible at the time the contract was let to know that that machine tool would be necessary for rapid production of that article?
Colonel HARE. Unfortunately, I do know the details. It is possible, and similar cases have occurred where the tool that the manufacturer had, became unserviceable during the operation and replacement of the tool was immediately necessary.
Senator Johnson of Colorado. Colonel Hare, when you let a contract for some piece of war machinery, you set a time limit; it must either be delivered within 6 months, or 9 months, or 12 months, as the case may be.
Colonel HARE. Yes. We, in some cases, we set a time limit, and in some cases the bidder is asked to state when he can make the deliveries.
Senator Johnson of Colorado. But you finally determine that time limit.
Colonel HARE. Yes; at the time of the award, we accept the contract that is most advantageous to the Government from the standpoint of time, mostly from the standpoint of time and cost.
Senator JOHNSON of Colorado. And you give him time enough so that he can make the whole piece of machinery in his plant, or do you cause him to assemble that piece of machinery, give him such a short period of time that he is compelled to assemble it?
Colonel HARE. At the time he bids we do not know whether he is going to make it in his own plant or is going to farm it out.
Senator JOHNSON of Colorado. He will tell you that, if you asked him.
Colonel HARE. Yes.
Senator JOHNSON of Colorado. He gives you all of the information you want to know at the time that you let the contract?
Colonel HARE. That is right.
Senator Johnson of Colorado. I am very much interested in some small industries, some small manufacturing industries. They are having a very difficult time. They are unable to get any defense contracts. They are unable to get material and supplies to manufacture the things that they always have manufactured in the former trade. So they are compelled to close their shops.
They have a small group of expert workmen available. If they could get some small pieces of machinery, some small castings, make them in carload lots, they could go ahead and continue and render a service; but they are unable to do that and they are unable to go ahead with their regular business and so they have to close their shops.
A lot of little industries of that kind are in a tragic situation.
Have you made a study of that and are you in a position to state, or have you found any remedy for it in any way, or anyway out for these little fellows to get in and help in the defense program and continue the services which they are able to perform and are able to give?
Colonel HARE. We recognize that condition. We have studied it and the O. P. M. has studied it and as a result of that condition there came into this war effort or this defense effort the defense contract service which is directed just toward the remedying of that condition.
The War Department believes that the need for the little fellow is going to be greater in the future, because when we went to an industry with our requirements, naturally we went to the large plants that we knew were qualified that could promise the faster deliveries, which were important.
Now, those facilities are pretty well filled. They are going to be forced to farm out in order to take additional orders.
Senator DOWNEY. May I intervene right there?
Senator Downey. I think that brings us right up to the crux of this bill. I think many big industries do not want to farm out. They want now the power through the Government to seize equipment and machinery of the smaller institutions, so that they can take their personnel and workmen and take their machines, and go ahead without farming out. I think that it comes right up to that point, Mr. Chairman. That is my opinion.
Senator Johnson of Colorado. That is also my opinion.
Senator HOLMAN. Not only small industries, but rival and competing industries.
Senator JOHNSON of Colorado. Certainly.
Senator JOHNSON of Colorado. This bill, instead of diffusing industry throughout the country, would tend to monopolize it and consolidate and centralize it.
Senator DownEY. Mr. Chairman, could I intervene here?
Senator DOWNEY. I think both of these gentlemen have performed valuable service for us and I am very much interested in what they have to say, and I would like to hear them later, but I must admit that there is something that I would like to see, and I would like to know, so far as I am concerned.
I wonder, Mr. Chairman, if it would be too much of a request for me to make and could not we call before us here the representatives of the Government and of the industries who would testify as to what is being done in defense production in Los Angeles, in the airplane and shipbuilding industry; let us find out how much they have produced; what are the orders; do they have sufficient equipment and