SUBCOMMITTEE ON DEPARTMENT OF DEFENSE APPROPRIATIONS GEORGE H. MAHON, Texas, Chairman HARRY R. SHEPPARD, California ALBERT J. ENGEL, Michigan ROBERT L. F. SIKES, Florida CHARLES A. PLUMLEY, Vermont RICHARD B. WIGGLESWORTH, Massachusetts 1 1 Temporarily assigned. MONDAY, JULY 17, 1950. DEPARTMENT OF THE NAVY BUREAU OF SHIPS, MAINTENANCE REAR ADM. H. G. HOPWOOD, UNITED STATES NAVY, DEPUTY COMP- CAPT. J. W. AILES III, UNITED STATES NAVY, OFFICE OF BUDGET AND REPORTS CAPT. H. W. TURREY, UNITED STATES NAVY, ASSISTANT DIRECTOR OF LOGISTICS PLANNING DIVISION, OFFICE OF THE CHIEF OF NAVAL OPERATIONS REAR ADM. J. F. JELLEY, UNITED STATES NAVY, CHIEF, BUREAU OF YARDS AND DOCKS CAPT. J. R. PERRY, UNITED STATES NAVY, ASSISTANT CHIEF FOR OPERATIONS, BUREAU OF YARDS AND DOCKS REQUEST FOR EXTENSION OF AVAILABILITY OF FUNDS Mr. SHEPPARD. The committee will come to order. We have a supplemental item in House Document No. 640 for the Bureau of Ships requesting language which would extend the availability of 1947 and 1948 funds for liquidation of certain existing obligations. The language requested is as follows: BUREAU OF SHIPS MAINTENANCE Not to exceed $12,000,000 of the unexpended balance of the appropriation for "Maintenance of Bureau of Ships," in the Naval Appropriation Act, 1947, and not to exceed $20,000,000 of the unexpended balance of the appropriation for "Maintenance, Bureau of Ships," in the Navy Department Appropriation Act, 1948, shall remain available during the fiscal year 1951 for the liquidation of obligations incurred thereunder during the fiscal years 1947 and 1948, respectively. Mr. SHEPPARD. Proceed, Admiral, with such general statement as you may have. We will refrain from making inquiries until you have completed your statement. Admiral HopwOOD. Thank you, sir. The first item requested as indicated from the language of House Document No. 640 requests a reappropriation of funds from two appropriations: Maintenance, Bureau of Ships for 1947 and Maintenance, Bureau of Ships for 1948. These two appropriations, Mr. Chairman, lapsed for purposes of expenditure previously, and while technically no legislative authorization is necessary; in other words, a claim by the industrial companies concerned could be submitted and cleared by the General Accounting Office and the bill will be paid-it was determined that the best procedure would be to get authorization to liquidate these indebted nesses. They come about principally in the area of communications electronics. The process of development was delayed; therefore, the items for delivery were not made within the time limits of the appropriation. There are no new funds required; it is just a question of extending the authority to spend the appropriations of 1947 and 1948 under the appropriation "Maintenance, Bureau of Ships," for this fiscal year. Mr. SHEPPARD. Your statement actually pertains to the request reflected on enclosure (1) and enclosure (2) of the justification? Admiral HopWOOD. Yes. Mr. SHEPPARD. It is comprised of two figures; the first one of $12,000,000, and the second one of $20,000,000? Admiral HopwOOD. The $12,000,000 figure concerns "Maintenance, Bureau of Ships, 1947." The $20,000,000 concerns "Maintenance, Bureau of Ships, 1948." Mr. SHEPPARD. Off the record. (Discussion off the record.) Mr. SHEPPARD. You have authority of law insofar as the total authorization of this type of operation pertains? Admiral HoPWOOD. Yes, sir. Mr. SHEPPARD. And this request covers maintainence exclusively and covers no new construction at all? Admiral HopwOOD. That is right. It is paying old indebtednesses when, through no fault of the Navy or the contractor, communications electronic equipment was delayed in manufacture due to rapid strides in development. Mr. SHEPPARD. Where is the major portion of this type of expenditure going to be applied? Admiral HopWOOD. In electronics, in the communications field. Mr. SHEPPARD. Will this be the withdrawing of some of our socalled rolled-up inventory and putting it into circulation again by procedures of repair? Admiral HopwOOD. No, sir; it is for new equipment that has been delivered subsequent to the expiration date of the appropriation for expenditure purposes. Mr. SHEPPARD. And presently in whose custody? Admiral HopwOOD. The Navy. Mr. SHEPPARD. In other words, the Navy has received delivery of this material, and it is now a matter of getting the funds to pay for it? Admiral HOPWOOD. That is right. I am not sure that we have received 100 percent delivery, but it is expected that 100 percent delivery will be received during the fiscal year. Mr. SHEPPARD. Off the record. (Discussion off the record.) MATERIALS ON ORDER Mr. WIGGLESWORTH. What is this material? Admiral HopWOOD. Electronic communication equipment. Mr. WIGGLESWORTH. Do you have any breakdown of it? Admiral HopWOOD. I do not have a breakdown of the specific material. Mr. WIGGLESWORTH. Is there any reason why it should not be furnished to this committee? Admiral HopWOOD. No, sir. We can furnish the items. Mr. WIGGLESWORTH. Do you not think you ought to have a breakdown when you ask for funds so that we know what we are appropriating the money for? Admiral HopwOOD. I agree with you, sir. Mr. WIGGLESWORTH. I wish that you would furnish such a breakdown for the committee's use. Admiral HOPWOOD. Yes. DELAY IN DELIVERY OF MATERIALS Mr. WIGGLESWORTH. How long is this delay going on? We are in the fiscal year 1951, and you ask us for money in respect to orders placed in 1947. Not knowing the type of equipment, it is a little difficult to judge the picture, but how long is this going to continue? Admiral HOPWOOD. In the field of electronics, Mr. Wigglesworth, suppose that we take for example the ultrahigh frequency radio equipment. We intend, so far as we are able, to get the latest developments included in our purchase. Mr. WIGGLESWORTH. But when is this job going to be completed? Do you think it is going to be 100 percent completed this year, or are you going to come back next year and tell us there has been further delay? Admiral HOPWOOD. It is expected, and we have every reason to believe, that it will be completed in 1951. That is the reason that this date was set, sir. The money has lapsed to the Treasury. No new funds are requested. PREFERABILITY OF CONTINUING AVAILABILITY OF FUNDS IN LIEU OF CONTRACTORS SUBMITTING CLAIMS Mr. WIGGLESWORTH. The money has lapsed, and you come up for your 1951 appropriations and make no mention of these items at all, and then as an afterthought you go back 3 or 4 years and want us to reappropriate funds already lapsed. We Admiral HoPWOOD. It would not be necessary to come up. could forget about it and the contractor would have every legal right to go to the Court of Claims and collect the money. We know that the obligation exists, and we thought in the interest of the contractor and our good relations, and in the interest of the Navy in saving a lot of unnecessary paper work and work in our legal department, and because it is a just expenditure, this is the way to do it. DELAY IN DELIVERY OF MATERIALS Mr. WIGGLESWORTH. There is no limitation on the time of delivery as far as the contractor is concerned? He is 4 years late, but as a matter of law he has the right to deliver this year, next year; is there no limitation? Admiral HopWOOD. Initially there was a limitation, but as the Navy put change orders in the contract, the date of delivery, of necessity, had to be delayed. Mr. WIGGLESWORTH. Within what time must deliveries be completed by the contractor? Admiral HopwOOD. I think it varies, with the type of equipment. Mr. WIGGLESWORTH. I am talking about this equipment on which you have not given us a breakdown. Admiral HopwOOD. I do not have a breakdown as to the specific terms of the contract for these particular items. I can furnish that. Mr. WIGGLESWORTH. Do I understand you to tell this committee that although it is delivered 4 years late, he has complied with his legal obligations in full and there is no escape from payment on the part of Uncle Sam? Admiral HopWOOD. That is right. Mr. WIGGLESWORTH. Although you do not know offhand what the period is within which he must deliver? Admiral HoPWOOD. I do not have that. Mr. WIGGLESWORTH. How do you know that he is complying? It seems to me you are giving a rather hazy presentation here. You may be entirely right but the justification is not convincing. Admiral HOPWOOD. These are not new funds. It will be a continuation of availability of funds. No new authority is requested. Mr. WIGGLESWORTH. I understand that, but normally the contractor has to comply with specifications to collect his money. Admiral HOPWOOD. That is correct. Mr. WIGGLESWORTH. And you do not know whether he has or has not? Admiral HOPWOOD. I think that he has complied with the specifications. Mr. WIGGLESWORTH. I know you think so, but I am asking for something for the record that will establish the fact. You have not given it to us. Admiral HopwOOD. I will have to supply that information for the record. Mr. WIGGLESWORTH. I have no further questions. Mr. SHEPPARD. You have someone in the Navy, I assume, who has a first-hand understanding of the procedure and the obligations involved? Admiral HoPWOOD. Yes. Mr. SHEPPARD. How soon can you get that person up here? Mr. SHEPPARD. Have him here in half an hour. Mr. SIKES. Admiral Hopwood, as I understand it, the delays have not been due to the fault of the contractor in completing his order, but have been necessitated because you have changed the design on the orders for the electronic equipment and matériel in order to keep abreast of modern warfare; is that right? |