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EXHIBIT B.-Statements of operations for the period July 1, 1944, to Jar. 31,
1945-Continued Net operating income.
FUNCTIONS IN RE PROCUREMENT OF SURPLUS PROPERTY FOR SMALL
Mr. WIGGLESWORTH. Now, tell me again with reference to this surplus property business, do I understand that in war your function is just to be the ear and the eye for small business? Mr. MAVERICK. Not altogether, Mr. Wigglesworth.
Mr. WIGGLESWORTH. Tell me in simple terms what you do because it is not clear yet as to just what your functions are.
Mr. MAVERICK. Under the present law we have the power to make private contracts on procurements. That means we can go to the İVar Department and say: "We will build all your tanks for you," or we can go to the Navy and say, “We will build all the battleships for you," but we do not do that because we know we would not be backed by public opinion or have any success in doing it.
Now for comparison, in the surplus property end of it we have the right to buy property, and sell it. I would not be so vulgar as to say that is a "club,” but it is a moral force, we will say, to be there with the disposal bodies to get the little businessman a square deal. On the basis of that power we are amicably working out regulations with the Surplus Property Board.
Mr. WIGGLESWORTH. But you have not bought any yet?
Mr. MAVERICK. No, we have not bought any yet, and we do not intend to buy any unless it is absolutely necessary. It is just like taking a prime contract, because there is no sense in us setting up big groups of warehouses all over the United States to compete with the other governmental agencies, and we do not want to do that. We merely want to see that there is a wide distribution of this surplus material. I wanted to emphasize that. The full facts as to what we do on surplus property can be given by Mr. Lamb if you want them.
Mr. WIGGLESWORTH. I do not want to encumber the record too much, but I wanted to get clearly in mind just what is the function of this agency, and what the cost is.
Suppose I am a small businessman; how are you going to help me in the purchase of surplus goods?
Mr. LAMB. If you are a small businessman you have to consider, first, the different classes of goods, capital goods and consumers' goods. We can procure them for you.
Mr. WIGGLESWORTH. How do you procure them?
Mr. LAMB. If we exercise the priority provided in the law, which allows us to buy them before public sale, we receive from you a sertified check. That certified check with proper endorsement is presented to the disposal agency-in the case of capital goods, the R. F. C. We act as your agent in the purchase, and you get the goods. We have been paid for them, and we reimburse that agency.
Mr. WIGGLESWORTH. Why could I not go to this agency and say, "Here is my certified check," and get the goods?
Mr. LAMB. You cannot go except through us, under the priority, because the law gives the priority to the Smaller War Plants Corporation. If you go to the agency you have to do it at the time of public sale, and you may be confronted with competition problems that would not afford you the opportunity of getting the goods.
Mr. CASE. Supposing there are two business firms: One comes to you and asks you to exercise priority, and the other does not. Supposing, then, that one firm is headed by a man who is not a veteran, but that is the firm that comes to you. The firm or the prospective purchaser who is a veteran does not come to you. What happens in that case?
Mr. LAMB. The veteran has preference.
Mr. LAMB. That has not been clarified. We assume that the veteran will come first.
Mr. Cass. Ahead of the Smaller War Plants Corporation ?
Mr. LAMB. In the event, we will say, of two small business people appearing to make a purchase, one through us and the other directsupposing there are other bidders at the time of the sale, and we have made arrangements through the Surplus Property Board and the disposal agency—if a small businessman or a veteran or anyone in the preference class, a nonprofit institution, should appear at the time of the sale, we may have to refuse to allow them to get the equivalent of one unit of the item being sold at the time of the sale. Mr. TABER. Did you finish your statement? Mr. LAMB. I tried to cover it.
PRIORITY OF SMALLER WAR PLANTS CORPORATION
Mr. Case. As between you and other Government agencies do you have a priority over any Government agencies?
Mr. LAMB. There is a period of 30 days before the time of public sale in which State agencies, local governments, and the Smaller War Plants Corporation have priority. The regulation provides that in the first 18 days the Federal agencies and the Smaller War Plants Corporation have the right of preference.
Mr. CASE. But as between you and other Federal agencies what is the order of priority?
Mr. LAMB. I would say a Federal agency comes first, because it is generally accepted that that is the intent of the law.
Mr. WIGGLESWORTH. You mean priority between Mr. Jones and Mr. Smith, both of them being small businessmen?
Mr. LAMB. No, sir. The priority procedure before public sale gives us during a certain period the right to purchase and resell to a small businessman. After that 30 days you strike a preference period which takes a different kind of treatment.
Mr. WIGGLESWORTH. Your function is divided between A, B, and C, all of them small business concerns ?
Mr. LAMB. Yes, against their registered need, which they register with us and which we file with the disposal agency.
Mr. WIGGLESWORTH. From the legal standpoint that is the only necessity for the Smaller War Plants Corporation!
Mr. Lamb. It is reflected in the law which defines our responsibility to a disposal agency, and the Board recognizes the fact that we can provide a function which they are not equipped to perform. Mr. WIGGLESWORTH. My question is as to the law.
Mr. LAMB. The law says we have a responsibility to exercise that priority.
Mr. WIGGLESWORTH. And that is all ?
TECHNICAL ADVISORY SERVICE
Mr. WIGGLESWORTH. I want to ask you about another thing. I see you have got in your justifications funds for advisory service, technical consultation and research, and so forth; for instance, helping in the preparation of claims for smaller businessmen and assisting contractors in presenting their problems to the regular agencies of the Government for small business. What is the authority for that kind of work and what is the over-all cost contemplated for it?
Mr. MAVERICK. The authority, of course, is statutory; but the details I will ask Mr. Lamb to give you.
Mr. LAMB. You describe two functions: One that relates to assisting contractors, and the other relations with other agencies relating to contract termination, which is a very substantial problem resulting from these cut-backs. We have undertaken a program for the Army and the Navy of educating these contractors throughout the country as to their rights as it affects their capital return in connection with the termination problems that will arise as the result of their contracts. That is a very important function of the Corporation for their limited investment, and it will be emphasized more as the cut-backs take place.
Mr. WIGGLESWORTH. Why should you help in the presentation of claims before the agencies of Government?
Mr. LAMB. We do not necessarily help them before agencies of Government. We assist them in disseminating information to them. Ve worked up a manual for them as it affects the average small businessman who does not, in many cases, have accounting advise or lots of other advice necessary to present his claim. We act as a repIP pntative in introducing him to the proper people to get his claim adjudicated and to inform him of his rights, which will have a lot to do with his recovery as it affects the problems of termination.
Mr. WIGGLESWORTH. Do you appear as an attorney?
Mr. LAMB. Not necessarily in the sense of a formal presentation; but we guide the man in his problems, in interpreting his rights.
Mr. WIGGLESWORTH. You guide a man from agency to agency and talk for him?
Mr. LAMB. We introduce him and talk for him, if we have to, to see hat his rights are protected.
Mr. WIGGLESWORTH. How much, over all, is involved in this general advisory work? I notice all through the jurisdiction indications of what I would call advisory work that you have in contemplation.
Mr. LAMB. The technical advisory work has a comparatively small staff compared with the size of the problem as it relates to the national problem that is related to helping a man rehabilitate his business.
Mr. WIGGLESWORTH. Perhaps we will get into that in the details here. But let me ask you this.
AUDITING ACCOUNTS OF CORPORATION
On the matter of auditing accounts, I see that you plan to go forward without an outside auditor?
Mr. MAVERICK. That is a leading question, Mr. Congressman. We voluntarily asked that the General Accounting Office audit us, and we so stated in the hearings before the Senate committee last year. You did not ask us that question last year. But Senator McKellar asked it. The General Accounting Office is now working on our books, and we are working with them, as far as I know, very effectively. We are glad to do it. That is my personal belief and that is the belief of the Corporation, and it is our policy.
Mr. WIGGLESWORTH. So you do not need any funds for outside auditing?
Mr. MAVERICK. No, sir.
REPORTS OF CORPORATION
Mr. WIGGLESWORTH. Are you making 60-day reports to both Houses!
Mr. MAVERICK. We make them to the War Production Board, the President, and to both Houses of Congress.
Mr. WIGGLESWORTH. You have been making those reports every CO days?
Mr. MAVERICK. Yes, sir.
AUDITING NEEDS EXPLAINED
Mr. DENIT. When you say we do not need any money for outside audits, we have to condition that reply. We do not need any money for an outside audit of the books and records of the Corporation, but we do expend money on occasions for audits of the books and records of borrowers wherever we have an indication that they may be dissipating the money we have loaned them, or indications of mismanagement. We do employ certified public accounting firms to make audits of those people.
Mr. WIGGLESWORTH. Those are all the general questions I have, Mr. Chairman.
ADDITIONAL STATUTORY DUTIES OF CORPORATION
Mr. MAVERICK. I want to say something either now or later on in the record with regard to what you stated about our being a link. I can either take 2 or 3 minutes now or put it in the record later on.
Mr. CANNON. Just as you prefer.
small concerns requesting aid in the solution of technical