can usually find something wrong with any job that is just manufactured on the job, such as a partition where you are assembling things. So we didn't know how much trouble could be caused.

Mr. BROOKS. When did you hear about the Henges Co.'s bribe attempt? At the time it happened, or later?

Mr. GROPPEL. Originally I heard that they-this was through the gentleman that gave the deposition here

Mr. BROOKS. Mr. Benoist?

Mr. GROPPEL. Yes.

Mr. BROOKS. You heard from him?

Mr. GROPPEL. From him we heard that they had offered to cut our price $5,000. That probably was round figures.

Mr. BROOKS. That they would give him $5,000?

Mr. GROPPEL. Yes. They would take the job for $5,000 less than our figure.

Mr. BROOKS. Would they reduce that total cost? Were they contemplating that they would reduce the total cost of the contract from $177,000 to $172,000? Was that $5,000 saving to be passed on to the Government?

Mr. GROPPEL. It was the figure that he mentioned here. In other words, he mentioned our figure of $50,000. They would go $5,000 under it, or would take the contract at $45,000.

Mr. BROOKS. This would be direct remuneration to Benoist?

Mr. GROPPEL. Originally, up until just a few weeks ago, all I knew was that the contract would be reduced by $5,000. Within the last 3 weeks Mr. Benoist did tell one of our men in the office that of that $5,000, not necessarily would the whole $5,000 have gone to Hercules. But I am not familiar with those details.

Mr. BROOKS. The figure that Mr. Benoist told you the Henges Co. offered was $5,000; is that right?

Mr. GROPPEL. Roughly $5,000, yes; $5,000 under our price.

Mr. BROOKS. Following those letters of protest from the Henges Co., I believe that Mr. Lund and Mr. Jay inspected your work. Would you please tell us their reaction or attitude at that time when they went on your job?

Mr. GROPPEL. I had heard they were coming and I wanted to be down there when they made the inspection. In fact, we had informed all of our mechanics and everyone else to call the office if they came. However, I was not there when they inspected it.

We called this meeting-that was called in Kansas City. Actually, at that time I couldn't give you any impression of their inspection of it, except there were certain details that were entirely illogical, that we talked an awful lot about nothing.

Mr. WALLHAUSER. Did they object to the installation, or the quality, or workmanship?

Mr. GROPPEL. Yes. There was one objection particularly, of where some screws were out. I don't really know who suggested it. Somebody suggested a metal strip over it, which is not standard practice. However, that was corrected at our expense. Due to this rushing, of getting this done, we had several hundred dollars in overtime, also. We worked on Saturdays and such, primarily to avoid embarrassment to the general contractor and such, in the completion of the job.

The job did not go through in routine and it cost us quite a lot more to put the job in than if it had gone through in what we consider normal installation fashion.

Mr. BROOKS. Mr. Groppel, as I understand it, you said that the Henges Co. had told Mr. Benoist they would lower their price to meet yours; is that right?

Mr. GROPPEL. Yes.

Mr. BROOKS. And your price was about $63,500? I mean yours was $50,000?

Mr. GROPPEL. That included the acoustical material as well.

Mr. BROOKS. Their price had been $63,500, and they were going to agree to meet your price at $50,000. Is that what you understood their proposal was to him?

Mr. GROPPEL. After the extraneous materials-and I am not familiar with the exact sums of this-but roughly of our partition figure they would go $5,000 below that. Mr. Benoist had the separate flooring and ceiling contracts that he could make a better analysis of that than we could because we actually figured the ceiling and floors together. Henges originally figured ceilings, floors, and partitions, as one lump sum.

Mr. BROOKS. On ceilings and floors he was going to keep his own subs. But on partitions only he was going to meet your price? Mr. GROPPEL. That's right.

Mr. BROOKS. And in addition to meeting your price, they were going to

Mr. GROPPEL. Go $5,000 lower.

Mr. BROOKS. Give them $5,000; do it for $5,000 less?

Mr. GROPPEL. That is right.

Mr. BROOKS. Does that mean they were going to give them $5,000, or they were going to bill them only $45,000? What was your understanding of them, in your conversation with Mr. Benoist?

Mr. GROPPEL. My understanding originally, when the job was let, was that it would just be a reduction in price, that they would take the contract for $45,000.

Mr. BROOKS. What was your later understanding of it?

Mr. GROPPEL. My later understanding and this is somewhat second hand because I did not talk to Mr. Benoist was that they would go under our price a thousand dollars, and then there would be

some

Mr. BROOKS. Go under your price how much?

Mr. GROPPEL. $1,000.

Mr. BROOKS. That would be $49,000?

Mr. GROPPEL. That would be to the Hercules Construction Co.

And then the rest of the money would be divided.

Mr. BROOKS. $4,000?

Mr. GROPPEL. I believe that is

Mr. BROOKS. Would be divided between whom?

Mr. GROPPEL. I am not sure of that.

Mr. BROOKS. Mr. Benoist was to receive a portion of that?

Mr. GROPPEL. That's right. He was to be one of them. Where

the other was to go I don't know. Probably in the company. Mr. BROOKS. His partner, or his associates?

Mr. GROPPEL. Yes.

Mr. WALLHAUSER. Mr. Chairman.

Mr. BROOKS. Mr. Wallhauser?

Mr. WALLHAUSER. What was the reason given by Mr. Benoist for not accepting the lower price of $5,000?

"

Mr. GROPPEL. Well, we were very worried. We were afraid that he was going to do it, because sometimes it is practice. He could have made $5,000. The only reason I can see is that maybe at the time he knew more than we knew, and just didn't want to get involved in something.

Mr. WALLHAUSER. This so-called cutoff date is adhered to by most contractors, it says, but not by all; is that right?

Mr. GROPPEL. Well, practically all in St. Louis.

Mr. WALLHAUSER. Was that his specific reason for not accepting the lower price?

Mr. GROPPEL. Yes. The competitive condition got so bad in St. Louis that the general contractors had to get together and organize this Ethical Bidding Practices Act, which was mentioned in the letter here, because no subcontractor would call them until 20 minutes before a bid was due, because the bid was being peddled. Due to that now they get their figures 4 hours before. They are not supposed to take another figure after a certain time. Theoretically, in order to avoid the cutthroat competition, they are supposed to let it to the man whose figure they used.

Mr. WALLHAUSER. Your testimony is to the effect, if I understand it correctly, that you have no knowledge of any bribe attempt or alleged bribe attempt?

Mr. GROPPEL. Honestly, I have no knowledge.

Mr. WALLHAUSER. Thank you.

Mr. BROOKS. As I understood you, you said they were just going to give them $5,000 below the cost. That was your understanding of what Mr. Benoist told you?

Mr. GROPPEL. That was my understanding; yes, sir.

Mr. BROOKS. It wasn't a bribe; it was just $5,000 they were going to give them?

Mr. GROPPEL. That's right.

Mr. WALLHAUSER. Pardon me, Mr. Chairman. The general contractor might have passed that on to the Government. He doesn't know that, I think.

Mr. GROPPEL. No.

Mr. BROOKS. What was your understanding?

Mr. GROPPEL. The general contractor, he would have made-the Hercules Co. would have made the $5,000. It was a firm contract. Mr. BROOKS. He had a firm contract for $177,000?

Mr. GROPPEL. Yes, sir.

Mr. BROOKS. Was there any indication in your wildest dreams that he was going to reduce that contract to $172,000?

Mr. GROPPEL. No, sir.

Mr. BROOKS. And isn't it true that as a general rule the basic reason for not peddling subs just before the general contractors file is that if they call up to 20 minutes, or 10 minutes, wait to the last minute to turn in their subs, the generals, when they run their tapes, could submit a wrong total figure?

Mr. GROPPEL. That is correct.

Mr. BROOKS. And if they make an error, you see they are trapped, they are hung, because if they come in at $167,000 because the secretary who made that tape made an error, that is $10,000 that they would have to eat. This is very embarrassing to general contractors. Mr. GROPPEL. That is correct. They need the 4 hours to analyze their figures.

Mr. BROOKS. They need to collect their figures. It is not a matter of shopping any more, but to get their figures correctly analyzed so they can submit a bid that they can justify and actually operate under. Is that the general theory of why you all try to

Mr. GROPPEL. That is correct. Also, a subcontractor that makes a mistake has 2 of that 4 hours to just completely withdraw his figure and not

Mr. BROOKS. Not to cut in, but withdraw it?

Mr. GROPPEL. Yes.

Mr. BROOKS. He can quit, but he can't peddle it?

Mr. GROPPEL. That is right. He can.

Mr. BROOKS. Can you tell us about the conference on September 4 with the General Services Administration folks? We would like to know what was discussed on the attitude of Mr. Lund and Mr. Jay at that conference.

Mr. GROPPEL. Well, there were certain construction-as a matter of fact, as I gather, there wasn't any particular agenda. We talked about a number of things. Some of us would like to have brought out this bidding at that particular meeting.

Mr. BROOKS. This bidding procedure?

Mr. GROPPEL. That's right. Not the bidding procedure, I mean the fact that Henges could reduce his price so awfully much if he wanted to. It was quite a few thousand dollars difference there between what he quoted and what he was willing to take it for when the cards were down.

Then we got into technical discussions. Mr. O'Brien doing most of the talking because he is the manufacturer of it. That is where the question came up. This was not being installed by O'Brien; it was being installed by another company. However, we were making it, the installation, in accordance with the O'Brien specifications.

Then changes were suggested that were not in accordance with any procedure that O'Brien had ever used.

Mr. BROOKS. For recommended installations?

Mr. GROPPEL. For recommended installations. We were willing to go along with some, but we began getting the feeling, as if-for instance, we had wall channels. There was a question of how they should be fastened-they hold absolutely nothing, just hold themselves up-and no question of how often they should be an attachment or screw should be in a wall channel. Frankly, that couldn't even fall out if it didn't have a screw in it. When we started hearing things such as that criticized, we began wondering what was going to happen when we got to final inspection. Actually it didn't. We got along much better after this conference.

Mr. BROOKS. Did you feel the conference with Mr. Jay and Mr. Lund was successful from your standpoint of working out some of the differences that you felt existed?

Mr. GROPPEL. It was successful, I would say.

Mr. BROOKS. Is that why you didn't bring out the facts regarding Henges Co. conduct on the affair at that time?

Mr. GROPPEL. It seemed like no one really wanted that particularly brought out, and as it happened, it didn't look like we were going to get treated too badly on it, and we just forgot it.

Mr. BROOKS. Did you have any more trouble from the Henges Co. after that conference with the GSA ?

Mr. GROPPEL. No, we didn't.

Mr. BROOKS. They quit inspecting your job for you?

Mr. GROPPEL. Apparently he did.

Mr. BROOKS. And helping your workmen put it together?
Mr. GROPPEL. Yes.

Mr. BROOKS. Did he give you any personal advice on how to run your own business, too?

Mr. GROPPEL. No, I didn't happen to meet any of them after that. Mr. BROOKS. I wonder if you would tell us the names of the general contractors that you submitted bids to, and which ones used your bid with the GSA. That was a list that Hercules did, and Kaye did, apparently, and Mr. Warren wasn't sure.

Mr. GROPPEL. Hercules and Kaye, we know used our bid.

Mr. BROOKS. Did Stocker?

Mr. GROPPEL. No. Stocker didn't. I am not sure of McDonald Construction Co., and I am not sure of Gil Snyder, whether they did or didn't.

Mr. BROOKS. Any of those that didn't use your bid, did they tell you why they didn't use it?

Mr. GROPPEL. Not right at the bidding time, because this all happened very fast, as to whether the bid would or would not be accepted. Mr. Benoist telephoned here at 9 o'clock Monday when the bid was due, I believe, at 10 o'clock.

Mr. BROOKS. Did he discuss it with you afterwards, as to why they had not used your sub?

Mr. GROPPEL. No, not immediately afterwards. I did not personally discuss it

Mr. BROOKS. Did they ever?

Mr. GROPPEL. Some of them did. One of my salesmen, a Mr. Murphy, in talking with Mr. Stocker, they had some discussion about it. I do not know whether he was afraid to use it, or not. However, as I understand, he would have been pretty low on the job had he used

it.

Mr. BROOKS. Mr. Stocker?

Mr. GROPPEL. Yes.

Mr. BROOKS. The Stocker Construction?

Mr. GROPPEL. Yes.

Mr. BROOKS. One other thing, was your company fined, or required to give GSA a credit of any kind because O'Brien partitions did not meet the specifications?

Mr. GROPPEL. No.

Mr. BROOKS. Anything else that you might want to tell us that you think bears on this inquiry?

Mr. GROPPEL. Nothing that I can think of.

Mr. BROOKS. Mr. Wallhauser?

Mr. WALLHAUSER. No questions, thank you.