a job away from me. About 98 or 99 percent of my time is devoted to my job as Assistant General Counsel of the Treasury.

The CHAIRMAN. I want to say, Mr. Spingarn, that you are not exactly the leader of a mob, a bureaucrat seeking to be relieved of your position.

Mr. SPINGARN. Only about 1 percent of my time is devoted to the work of Deputy Director of the Office of Contract Settlement. I would be deceiving you if I said I was an authority on contract settlement matters. In fact, when the Contract Settlement Act was passed in July 1944, I was in Italy with the Fifth Army, attached for the time to the One Hundredth Battalion, the famous Japanese-American outfit, one of the great fighting outfits of the war, about to go into the attack on Leghorn, or Livorno, as the Italians call it. The first I heard of the Contract Settlement Act was a little later that year, in the early fall, when I began to receive, as commanding officer of my unit, top priority orders jerking out some of the lawyers in my outfit and instructing that they should be returned by air to Ann Arbor, Mich., to learn the job of contract settlement officers.

The CHAIRMAN. What effect do you think that had on the outcome of the war?

Mr. SPINGARN. Well, they were naturally regarded as very cushy jobs, sir. We were in what is often spoken of as "sunny Italy," but actually, for 8 months of the year, it was very wet, cold, rainy, and muddy; and, of course, there were certain occupational hazards, too. I remember Italy pretty well because I spent almost 2 years there and I saw it all the way from Salerno to Brenner Pass, including some way stops at Cassino, Anzio, and Bologna. Most of the other men in the outfit wished they were lawyers, too. But there's no doubt that the contract settlement officers did a very fine job and a very neces

sary one.

I came back to the Treasury in 1946 and I had no connection with contract settlement until September 1947, when I was appointed Deputy Director of that Office.

Now I am here to propose an amendment to the bill, Senator Aiken, which would transfer the Office of Contract Settlement and its functions from the Treasury Department to the Federal Works Agency, along with the Bureau of Federal Supply. That recommendationand I have a draft of language here which would accomplish that, if the committee approves that recommendation not only has the approval of the Treasury Department, but it has the approval of the Federal Works Agency-I have talked with Mr. Johnstone, their general counsel, about the matter—and further, it has the approval of the Bureau of the Budget.

Briefly the story of contract settlement, as far as the Treasury is concerned, is that it came to us in December 1946 by Executive order on a temporary basis, and that was confirmed by a reorganization plan which became effective July 1, 1947. When it first came over it was part of a plan to dispose of certain war agencies and put them in permanent agencies of the Government, and the Treasury at that time was selected to take the residue, as it were, of the Office of Contract Settlement. The job of that office was then 99 percent completed, except for the work of its Appeal Board. It is now approximately 99.8 percent completed. However, there is no terminal date on the statute, and the job continues to go on.

The principal activity, the only real operating activity, that came to the Treasury was that of the Appeal Board of the Office of Contract Settlement. The Appeal Board hears appeals of contractors who are dissatisfied with the settlement that they get from the contracting agencies with which they contract. The Board is a quasi-judicial one. The only function that the Treasury performs is with respect to the appointment of its members and its houskeeping. The Treasury does not review the decisions of the Board. The appeals go directly to the court.

When Contract Settlement came to the Treasury in December 1946 for the first time, there were only 22 people transferred with that Office. Most of those were the Appeal Board and its staff. As of July 1, 1947, all members of the Office of Contract Settlement, other than the Appeal Board and its staff, had left the Treasury, and the very minor residual work of the office, other than the Appeal Board, was assimilated by Treasury Department personnel, including myself. That work is done in addition to our regular duties, and as I say, it represents only a minute fraction of the work of the people who handle it. There are actually only two items of work besides the Appeal Board work. One is that, under the act, we have to submit a quarterly report to the Congress on the status of the contract-settlement program. As I have told you, it is 99.8 percent completed. We simply collect those figures four times a year from the contracting agencies, put them together, and ship them up here. Any agency could easily do the job.

The only other job is to advise Members of Congress and members of the public who make oral or written inquiries to us about interpretations of Contract Settlement Act regulations and about procedures under the act.

The CHAIRMAN. Do you have many requests from Congress for information or interpretation of the act?

Mr. SPINGARN. We have only a limited number, four or five a week perhaps, Mr. Nichols advises me.

The CHAIRMAN. From both Houses of Congress?

Mr. SPINGARN. Including both Houses of Congress and the public. The work I am actually principally engaged in in the Treasury is that of assistant general counsel, and the contract-settlement work of this sort that I mentioned-that is, response to inquiries and interpretations-is done largely by Mr. Nichols, at my right here, who is Chief Counsel of the Bureau of Federal Supply, and one or two of the lawyers in his office. Some of those men are authorities on contractsettlement work. For example, Mr. Moses, the Assistant Chief Counsel, was a contract-settlement officer in the Army, and Mr. Charles Gasque, a lawyer in Mr. Nichols' office, was also a contract-settlement officer in the Army.

I want to emphasize that the Office of Contract Settlement is not, and never has been, an operating agency; the actual termination and settlement of contracts has been done by the contracting agencies, notably the War Department and the Navy Department, the Maritime Commission, the RFC, and our own Bureau of Federal Supply. The Contract Settlement Office, aside from its Appeal Board, was simply a policy-making office to prescribe uniform policies and procedures with respect to these matters, and as I say, the work is handled for

the Treasury, to a large extent, by lawyers of the Bureau of Federal Supply.

We believe contract settlement is actually an end result of procurement, and the agency which has the responsibility for making central procurement policy for the Government is the agency which should make the policy with respect to contract settlement; consequently, since that function is now going from the Treasury with the Bureau of Federal Supply to the Federal Works Agency, it is our belief that this presently minor contract-settlement function should also go to that Agency.

The CHAIRMAN. Do you have any work to do for the Office of Contract Settlement in respect to enforcement of contracts?

Mr. SPINGARN. None other than the Appeal Board, which is still in operation and is very busy. It now has a total of 10 full-time and 4 part-time employees, and, as I have said, the other contract-settlement work is handled by Treasury personnel in addition to their regular duties. We got an appropriation of $75,000 for the Appeal Board in fiscal 1948 and the current Treasury appropriation bill (now in the Senate) carries the same amount for fiscal 1949.

The CHAIRMAN. Senator Hoey, do you have any questions?
Senator HOEY. No; I have no questions.

The CHAIRMAN. We thank you, Mr. Spingarn.

Mr. SPINGARN. I will submit my formal statement for the record. (The statement referred to follows:)

STATEMENT BY TREASURY DEPARTMENT REPRESENTATIVES, ON PROPOSED AMENDMENT DESIGNED TO TRANSFER ALL OFFICE OF CONTRACT SETTLEMENT FUNCTIONS FROM THE DEPARTMENT OF THE TREASURY TO THE FEDERAL WORKS AGENCY, ALONG WITH THE TRANSFER OF THE BUREAU OF FEDERAL SUPPLY

The functions of the Office of Contract Settlement were transferred to the Treasury Department a little over a year ago. That office is not an operating agency but was established to prescribe, policies, principles, and procedures to govern the settlement of war contracts terminated for the convenience of the Government under the Contract Settlement Act of 1944 (58 Stat. 651; 41 U. S. C. 104), approved July 1, 1944. The Appeal Board and the Contract Settlement Advisory Board also were established by authority of this act. Shortly thereafter, by authority of the act of October 3, 1944 (58 Stat. 785; 50 U. S. C. 1651), the office was placed within the Office of War Mobilization and Reconversion. On December 12, 1946, Executive Order 9809 transferred to the Treasury Department: (a) The functions of the Office of Contract Settlement, (b) the Appeal Board, and (c) the Contract Settlement Advisory Board; and transferred to the Secretary of the Treasury the functions of the Director of Contract Settlement and the functions of the Director of War Mobilization and Reconversion with respect to the Office of Contract Settlement. Subsequently, the functions of the Director of Contract Settlement and the Office of Contract Settlement were transferred to the Secretary of the Treasury, and the Office of Contract Settlement was abolished, by Reorganization Plan No. 1 of 1947, effective as of July 1, 1947.2a The primary purpose of the Office of Contract Settlement is to provide, by general regulation, uniform policies and procedures for the settlement of war contracts by the contracting agencies. It should be noted that, during the period from July 1, 1946, to June 30, 1947, no new regulations and only one amendment to such regulations (amendment No. 2 to regulation No. 15, dated August 2, 1946,

2a Sec. 201 of plan No. 1 of 1947, effective as of July 1, 1947 (H. Doc. 230, 80th Cong.), provides:

"The functions of the Director of Contract Settlement and of the Office of Contract Settlement are transferred to the Secretary of the Treasury and shall be performed by him or, subject to his direction and control, by such officers and agencies of the Department of the Treasury as he may designate. The Contract Settlement Advisory Board created by sec. 5 of the Contract Settlement Act of 1944 (58 Stat. 649) and the Appeal Board established under sec. 13 (d) of that act are transferred to the Department of the Treasury: Provided, That the functions of the boards shall be performed by them, respectively, under such conditions and limitations as may now or hereafter be prescribed by law. The Office of Contract Settlement is abolished."

which concerned the rules of practice and procedure for the Appeal Board) were issued. Since the transfer of these functions to the Treasury Department, no new regulations, or amendments thereto, have been issued. During the course of the fiscal year ending June 30, 1947, the Office of Contract Settlement, except for the Appeal Board, was completely liquidated, and no appropriation was requested for the fiscal year ending June 30, 1948, and none was made, except for the Appeal Board. Such duties of the office as still remain are performed by an assistant general counsel of the Treasury Department, as deputy director, assisted by the Legal Division of the Bureau of Federal Supply. (This assistant general counsel, however, has many other duties and devotes only a very small portion of his time to the work of the Office of Contract Settlement.) These duties consist, at the present time, principally in answering inquiries from Members of the Congress and the public, asking for interpretations of the act and regulations of the Office of Contract Settlement, and procedures for filing claims. Many inquiries, however, are referred to the appropriate contracting agency concerned. The Office of Contract Settlement took the initiative in proposing a statutory period of limitations on claims under informal contracts (sec. 17, Claims). The bill is pending as S. 1983 and H. R. 5040 (80th Cong.).

Also, the Contract Settlement Act of 1944, as amended, requires a quarterly report to be made to the Congress on the program. This report consists mainly of compiling figures received from the contacting agencies of the Federal Government. This report can easily be prepared by any agency receiving such figures. The Appeal Board of the Office of Contract Settlement now represents the principal contract-settlement activity. The Board hears appeals from findings of contracting agencies on claims under terminated war contracts or under imperfect war contracts where no formal contract exists. The appeals filed are about equally divided between claims under terminated contracts and claims under imperfect contracts. In connection with the work of this Board, it should be noted that the Treasury does not review, and has no jurisdiction over, the decisions rendered by the Appeal Board of the Office of Contract Settlement. The activities of the Department of the Treasury in connection with the work of this Board are strictly limited to those of housekeeping functions and appointment of members to the Board.

As stated above the routine work of the Office of Contract Settlement, since its transfer to the Treasury Department, has actually been largely performed by the legal personnel of the Bureau of Federal Supply. Thus, it appears expedient and in the interest of greater efficiency that these functions be transferred with the Bureau of Federal Supply to the Federal Works Agency.

The proposed transfer of Office of Contract Settlement functions from the Department of the Treasury to the Federal Works Agency has been approved by the Bureau of the Budget and the Federal Works Agency.

In view of the foregoing and in the interest of better management and distribution of functions in the Federal Government, it is urged that the proposed amendment be adopted.

AMENDMENT SUGGESTED BY THE TREASURY DEPARTMENT

On page 5, between lines 21 and 22, insert the following new subsection 101 (b): "(b) The functions of the Director of Contract Settlement and of the Office of Contract Settlement, transferred to the Secretary of the Treasury by Reorganization Plan No. 1 of 1947, are transferred to the Federal Works Administrator and shall be performed by him or, subject to his direction and control, by such officers and agencies of the Federal Works Agency as he may designate. The Contract Settlement Act Advisory Board created by section 5 of the Contract Settlement Act of 1944 (58 Stat. 649) and the Appeal Board established under section 13 (d) of that Act are transferred from the Department of the Treasury to the Federal Works Agency, but the functions of the boards shall be performed by them, respectively, under conditions and limitations otherwise prescribed by law. There shall also be transferred to the Federal Works Agency such records, property, personnel, obligations, commitments, and unexpended balances (available or to be made available) of appropriations, allocations, and other funds of the Treasury Department as the Director of the Bureau of the Budget shall determine to relate primarily to the functions transferred by the provisions of this subsection."

On page 5, line 22, strike out "(b)" and insert in lieu thereof "(c)."
On page 7, line 8, strike out "(c)" and insert in lieu thereof "(d).”
On page 7, line 10, strike out "(d)" and insert in lieu thereof "(e)."
On page 8, line 5, strike out "(e)" and insert in lieu thereof "(f).”
74832-48- -4

The CHAIRMAN. The next witness we have is Mr. C. Tyler Wood, Deputy to the Assistant Secretary of State for Economic Affairs.

STATEMENT OF C. TYLER WOOD, DEPUTY TO THE ASSISTANT SECRETARY OF STATE FOR ECONOMIC AFFAIRS

Mr. WOOD. Mr. Chairman, I have a very brief statement to present, but before doing so may I make a very brief comment?

I do not claim that my joining Mr. Spingarn as a bureaucrat who wishes to see some of his responsibilities sloughed off changes him from an individual into the leader of a mob, but here is another one that proves that he is not alone.

I assume that the committee is primarily interested in the comments of the Department of State on title II of the proposed bill, since this title relates to the functions which are presently performed by the Department.

Responsibility for overseas surplus disposal was first placed in the Department of State by Executive Order 9630 of September 27, 1945. This basic responsibility was further implemented by Executive Order 9689 of January 31, 1946, which transferred the functions of Surplus Property Administrator and the Surplus Property Administration which related to surplus property located outside the continental limits of the United States to the Secretary of State and the Department of State, respectively. Public Law 584 of the Seventy-ninth Congress amended the Surplus Property Act to place substantially the above responsibility and authority in the Department of State under the terms of the act.

Operating responsibility for surplus disposal was accepted by the State Department in the first instance with great reluctance-that is, surplus disposal overseas. It was only because of compelling arguments brought by the Surplus Property Administrator and the Director of War Mobilization and Reconversion that the Secretary of State agreed to undertake an operation so divergent from the normal responsibilities of the Department. It was argued at that time that the disposition of property having an original procurement cost of perhaps $10,000,000,000 involved such profound considerations of foreign political and economic policy that it was essential to place the disposal operation directly under the foreign-policy-making body in order to assure effective coordination. It was also recognized at that time that the volume of property was so great that the only practical method of disposition in many instances would have to be through sales to the governments of the countries in which the property was located, and it was effectively argued that an organization within the Department of State would be in a much better position to carry out the required intergovernmental negotiations than one located in another agency. As was explained in the President's message, the foreign surplus property which has become, or will become, available in foreign areas has, in large part, already been committed for sale. While the property remaining is an important aggregate, and while further disposals in foreign areas should be in conformity with the foreign policy of the United States, we feel that this work of further sales can now be transferred to other agencies of Government and that foreign-policy considerations can now be adequately covered through consultative procedures.