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Mr. DREWRY. I would like to ask that the members of the subcommittee remain after the adjournment of this committee meeting.

The CHAIRMAN. And go into executive session?
Mr. DREWRY. Yes.

The CHAIRMAN. Then the committee will adjourn subject to the call of the Chair, and the members of the Normandie investigating committee will remain here and they will be considered in executive session. We want everybody on the floor at 12 o'clock.

(Whereupon, at 11 a. m., the committee adjourned.)

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[No. 205]

HEARINGS ON H. R. 6790, TO PERMIT THE PERFORMANCE OF

ESSENTIAL LABOR ON NAVAL CONTRACTS WITHOUT REGARD
TO LAWS AND CONTRACTS LIMITING HOURS OF EMPLOYMENT,
TO LIMIT THE PROFITS ON NAVAL CONTRACTS, AND FOR
OTHER PURPOSES

HOUSE OF REPRESENTATIVES,
COMMITTEE ON NAVAL AFFAIRS,

Thursday, March 19, 1942. The committee met at 10 a. m., Hon. Carl Vinson, chairman, presiding, for consideration of H. R. 6790, which is as follows:

(H. R. 6790, 77th Cong., 2d sess.) A BILL To permit the performance of essential labor on naval contracts without regard to laws and con.

tracts limiting hours of employment, to limit the profits on naval contracts, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Act (relating to naval construction and procurement) entitled "An Act to expedite national defense, and for other purposes," approved June 28, 1940, is amended by adding at the end thereof the following new title: "TITLE III-HOURS OF LABOR ON NAVAL CONTRACTS, AND so FORTH

"FINDINGS AND DECLARATION OF POLICY "Sec. 301. (a) Congress hereby finds that it is inconsistent with the expeditious and successful prosecution of the war effort and prejudicial to those serving in the naval forces of the United States

"(1) for any naval contractor to derive excessive profits from the performance of naval contracts;

"(2) for any naval contractor and any other person to enter into or maintain in effect any contract or agreement under which the voluntary performance of labor indispensable to the expeditious and successful prosecution of the war effort may be either (A) prohibited by any requirement that the labor of employees be limited to any maximum number of hours, days, or weeks in any specified period of time, or (B) penalized by any requirement that compensation be paid at a rate higher than the usual rate at which an employee is employed for labor in excess of a specified number of hours, days, or weeks in any specified period of time, or for labor on Saturdays, Sundays, holidays, or during the night;

"(3) for any naval contractor and any other person to enter into or maintain in effect any contract or agreement under which the voluntary performance of labor indispensable to the expeditious and successful prosecution of the war effort may be prohibited by any requirement that an employee be or become a member of, make any payment to, or maintain membership in, any labor organization, or under which any citizen of the United States may be prohibited from contributing his labor to the war effort by any requirement that such citizen be or become a member of, make any payment to, or maintain membership in, any labor organization; or

“(4) for the United States to maintain in effect provisions of law which either (A) prohibit the voluntary performance for naval contractors of labor indispensable to the expeditious and successful prosecution of the war effort by limiting the labor of employees of naval contractors to any maximum 66266-42—No. 205- -1

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number of hours, days, or weeks in any specified period of time, or (B) penalize the performance of such labor by any requirement that compensation be paid to employees of naval contractors at a rate higher than the usual rate at which they are employed for labor in excess of a specified number of hours, days, or weeks in any specified period of time, or for labor on Saturdays,

Sundays, holidays, or during the night. "(b) It is hereby declared to be the policy of this title to effectuate the expeditious and successful prosecution of the war effort by suspending, during the period of the war, such provisions of law and such provisions of contracts and agreements as are described in the above-enumerated findings.

"DEFINITIONS

"Sec. 302. As used in this title and in section 3, as amended, of the Act of March 27, 1934 (U. S. C., 1940 edition, title 34, sec. 496) (known as the VinsonTrammel Act)

“(a) 'Person' means an individual, partnership, joint venture, association, corporation, business trust, or any organized group of persons.

"(b) Naval contract' means a contract with the United States entered into on behalf of the United States by an officer or employee of the Department of the Navy.

"(c) Naval contractor' means the person designing, surveying, producing, manufacturing, processing, assembling, constructing, reconstructing, installing, maintaining, storing, repairing, altering, converting, distributing, supplying, or furnishing professional or technical services, under a naval contract.

“(d) 'Net profit derived from naval contracts' completed within a profit period means the excess of the aggregate of the contract prices under such contracts over the aggregate cost of performing such contracts, minus, in case in the preceding profit

period there was a net profit deficit from the performance of naval contracts completed within such preceding period, the amount of such deficit. “Net profit deficit' from naval contracts completed within any profit period means the excess of the aggregate cost of performing such contracts over the aggregate of the contract prices under such contracts.

“(e) Profit period of a naval contractor means the annual accounting period on the basis of which such contractor keeps his books.

"LIMITATION OF PROFITS ON NAVAL CONTRACTS

“Sec. 303. (a) Section 3 of the Act of March 27, 1934 (U. S. C., 1940 edition, title 34, sec. 496) (known as the Vinson-Trammel Act), is amended and reenacted to read as follows:

“ 'Sec. 3. (a) The Secretary of the Navy is directed to submit annually to the Bureau of the Budget estimates for the construction of the foregoing vessels and aircraft; and there is authorized to be appropriated such sums as may be necessary to carry into effect the provisions of sections 2 and 3 of this Act.

“'(b) Every naval contractor shall pay to the Secretary of the Navy, at such times and in such manner as the Secretary shall by regulations prescribe, all net profits derived from naval contracts, completed within each profit period, in excess of 6 per centum of the cost, determined as hereinafter provided, of performing such contracts. This subsection shall not apply with respect to any profit period in which the contract prices of contracts completed within such profit period do not exceed in the aggregate $10,000. All payments made to the Secretary of the Navy pursuant to this subsection shall be covered into the Treasury as miscellaneous receipts. For the purposes of other provisions of law the amount of such payment shall not be deemed to have been received by or accrued to such contractor.

“'(c) Every naval contractor shall, at such times and in such manner as the Secretary of the Navy shall by regulations prescribe, state under oath the aggregate of the contract prices under naval contracts completed within the profit period in respect of which such statement is made. The cost of performing naval contracts shall be determined in accordance with the method of cost accounting regularly employed in keeping the books of the naval contractor in question, but if no such method of cost accounting has been employed, or if the method so employed does not in the opinion of the Secretary of the Navy clearly reflect such cost, such cost shall be determined in accordance with such method as in the opinion of the Secretary does clearly reflect such cost. In the case of a naval contractor which does not regularly employ a method of cost accounting

in keeping its books, such naval contractor may, with the approval of the Secretary, determine the allocation of indirect costs to be made to naval contracts according to the ratio of direct costs of performing naval contracts to total direct costs. Irrespective of the method employed by any naval contractor for determining costs of performing naval contracts completed within any profit period, no item of cost shall be charged to the performance of any such contract or used in any manner for the purpose of determining the cost of such performance unless such item would have been chargeable against such contract if such contract had been subject to the provisions of this section and the regulations thereunder as in effect prior to the enactment of the Second Revenue Act of 1940.'

"(b) The amendment made by subsection (a) shall apply only to naval contracts completed within profit periods beginning after December 31, 1941.

"CONTRACT PROVISIONS ON OVERTIME, UNION SECURITY, AND SO FORTH "Sec. 304. (a) During the national emergency declared to exist by the President on May 27, 1941, it shall be unlawful for a naval contractor to enter into or maintain in effect any contract with any other person

"(1) which limits the labor which may be voluntarily performed by any employee of such contractor to any specified number of hours, days, or weeks in any specified period of time; or

"(2) which requires the payment to any employee of such contractor of compensation at a rate higher than the usual rate at which such employee is employed (A) for labor in excess of a specified number of hours, days, or weeks in any specified period of time, or (B) for labor on Saturdays, Sundays,

holidays, or during the night. "(b) During the national emergency declared to exist by the President on May 27, 1941, it shall be unlawful for a naval contractor to enter into or maintain in effect any contract with any other person which requires such contractor, by discrimination in regard to hire, terms, or tenure of employment, to encourage or discourage the membership of any employee of such contractor in any labor organization.

*(c) Whoever violates any of the provisions of this section shall upon conviction thereof be fined not more than $ or be imprisoned for not more than or both.

"PROVISIONS OF LAW ON OVERTIME, AND SO FORTH "SEC. 305. During the national emergency declared to exist by the President on May 27, 1941, the following provisions of law, as amended, are suspended, insofar as they

"(a) Prescribe the maximum hours, days, or weeks of labor for employees of naval contractors or of the Department of the Navy in any specified period of time;

"(b) Require compensation to any employee of any naval contractor or of the Department of the Navy at a rate higher than the usual rate at which such employee is employed (1) for labor in excess of a specified number of hours, days, or weeks in any specified period of time, or (2) for labor on Sundays, holidays, or during the night; or

"(c) Require stipulations in any contract which prescribe, with respect to any employee of any naval contractor or of the Department of the Navy, maximum hours of labor or require compensation at a rate higher than the usual rate at which such employee is employed for labor in excess of a specified number of hours, days, or weeks in any specified period of time, or for labor on Sundays, holidays, or during the night

“(1) 'An Act to expedite the strengthening of the national defense', approved July 2, 1940;

**(2) 'An Act authorizing overtime rates of compensation for certain per annum employees of the field service of the War Department, the Panama Canal, the Navy Department, and the Coast Guard, and providing additional pay for employees who forego their vacations', approved June 3, 1941;

(3) 'An Act providing for Saturday half holidays for certain Government employees', approved March 3, 1931;

"(4) 'An Act to provide conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes', approved June 30, 1936;

"(5) 'An Act to expedite national defense, and for other purposes', approved June 28, 1940;

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