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speed, ots: the Walsh-Healey Act. Through cooperation with the Labor Depart

ment we have tried to obtain definite statements as to what are the uilding r: meanings, not only of the language of the act, but of the rulings reduce ty made under the act. Certain general rulings necessarily had to be rocurema made in the beginning in order to get the machinery going, which larificat caused hardship to the Navy, particularly in the acquirement of cern order itain types of materials that we need. We have had very real coop

eration from the Labor Department in trying to iron out those difficulties, and I think now the act is working fairly smoothly, because we know just what is meant by the language that they use and how they will interpret that language in the administration of the act.

Mr. UMSTEAD. Of course the Navy Department is complying with maters the regulations of the Labor Department under the Walsh-Healey


Mr. Edison. Oh, certainly.

Mr. PLUMLEY. Mr. Secretary, reverting to what you had to say

about steps having been taken to decentralize material procurement, ny sa

I should like to ask if any orders or official memoranda have gone

out to these heads of departments or managers limiting or extending throu their authority definitely, so that they know with what authority Account they may proceed? been tre

Mr. Edison. None to my knowledge, officially. The matter is still
in the investigation stage, you might say.
Mr. PLUMLEY. But it is an attempt to cut out a lot of red tape?

Mr. Edison. My own experience in the past in industrial life has

been that a great many hardships and unnecessary expenses are Eng replaced on any organization when you try to centralize items which

should not be centralized. There are certain things in which great - line

advantage can be obtained from centralizing and buying in very · chand large quantities. There are other things--for example, repair parts

to machinery, something that is special and local to the particular

yard interested—that could much better be handled and much more I that expeditiously handled locally. They have certain latitude permitted

them now, and nothing has yet been done that materially changes the existing standards on that sort of thing. But I do believe that

something can be done which will cause considerable economies, and ; of that is being rigorously investigated.

Mr. PLUMLEY, I wanted to know just how far it had gone.
Mr. UMSTEAD. You may proceed, Mr. Secretary.


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Mr. Evison. I have had an examination made of a number of acts that tend to restrict the freedom of action of the Navy in doing business, you might say. I have here a compendium of the different acts that have been passed; some of them very old, and most of them, of

course, with regard to personnel. I just got together this study to see in what way we could review these acts, to see whether there were any changes in them that should be made that would bring them up to date and give a little more latitude in cases that impair eficient and orderly progress of work in the Navy.

The policy of maintaining a shore establishment sufficient to maintain the existing fleet and the laying down of every other vessel in

Government yard in accordance with the Vinson-Trammell Act has been continued.

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The program of machine tool replacement in industrial yards is being continued at a rate somewhat less than the recommendation of a special board convened for this purpose. A survey made in 1930 showed the average age of tools in the yards to be 19 years, which is considerably greater than good practice demands. To maintain the average age constant at 19 years would require an annual expenditure of $1,550,000, which would have included replacements and additions. The actual annual expenditures from 1930 through 1937 have averaged $1,195,000, as a result of which it appears that the average age is increased to something above 19 years rather than decreasing to the goal of 15 years which was set as a desirable standard.

The funds just mentioned are those appropriated to the Bureaus of Construction and Repair and Engineering.

A reasonable standard apepars to be to furnish machine tools so that only one shift is required in time of peace to provide for peacetime requirements. With this standard we would be prepared to more than double our production on a three-shift basis. At the present time, every yard has one or more shops which must work more than one shift under present peacetime demands. A recent survey shows that there now exists a need for some $16,000,000 worth of new tools. Budgetary requirements have, however, limited the amount requested for 1939 to $1,500,000, divided equally between Engineering and Construction and Repair.

Replacement of machine tools at ordnance and aviation plants are provided for in the specific appropriations of those bureaus and are not included in the survey mentioned heretofore. The only source of supply for torpedoes is the naval torpedo station at Newport. The facilities there, working on a three-shift basis, are unable to produce torpedoes rapidly enough to keep pace with the present building program and to supply replacements for torpedoes lost in target practice. We are proposing in these estimates to open the naval torpedo station at Alexandria and provide additional facilities in the way of machine tools and plant appliances to augment the production of torpedoes for the Navy. The present situation in regard to the production of torpedoes is a highly dangerous one from the standpoint of national defense.

I cannot emphasize that too strongly.


The manufacture of guns is concentrated at the Naval Gun Factory and Army ordnance arsenals. In wartime the Army would require all their facilities, which the Navy, in effect, maintains in peacetime, and we would actually have less capacity for producing guns for the Navy on the outbreak of war than we have at the present time. Commercial sources of gun manufacture should be fostered and encouraged.


The Navy Department is submitting proposals for two changes in language in the appropriation act to liberalize restrictions now imposed upon manufacture and procurement.


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The first of these requests the elimination of language which

restricts the purchase of fuel oil. The Navy has purchased oil under "ial yard the provisions of the so-called Buy American Act (47 Stat. 1520– ommend: 1521) since the date of its enactment on March 3, 1933. Under date rey mad of September 15, 1937, however, the Acting Comptroller General 19 years ruled that the limitation in the annual appropriation act, which is ands. I more restrictive than the general Buy American Act, will govern in quire a future contracts made by the Navy. "In view of this decision of the uded Comptroller General, the Navy Department must now advertise its rom 15 requirements for fuel oil under the provisions of the current annual appeas appropriation act. The whole Federal Government, including the

rather! Navy Department, is restricted in the purchase of all commodities desirable by the Buy American Act, with the single exception that the Navy

Department is now restricted in its purchase of fuel oil, not by the reaus a Buy American Act, but by the specific provision of the appropria

tion act. Since the petroleum industry of this country is protected tools by the Buy American Act to the same extent as all other industries, ide four the special provision of the appropriation act appears no longer to

serve any useful purpose. In fact, it may prove definitely detrimental to the Navy in providing its requirements of fuel oil by further restricting competition and it may well lead to difficulties through bidders overlooking this special provision as interpreted by the Comptroller General and assuming that the Buy American Act applies

The second is a change in the wording of the naval appropriation bill in order to augment commercial sources of supply for the Navy. For several years, every annual appropriation bill has carried a provision which prevents the assignment to private yards of work

which can be manufactured or produced in a Government navy yard The

or arsenal, when time and facilities permit and when, in the judgment of the Secretary of the Navy, it would not involve an appreciable increase in cost to the Government. Under conditions which have obtained for several years, and under present conditions, time and

facilities permit the manufacture of many types of ordnance and - of

other material by Government plants, and commercial manufacture of

is not sufficiently less expensive to require an exemption from the provisions quoted. Existing Government facilities, however, are totally inadequate to meet wartime needs. The law has the effect, therefore, of making it impracticable for several bureaus of the Nary Department, the Bureau of Ordnance in particular, to prepare in time of peace to meet adequately many of the problems of procurement and production with which they will be faced in time of

Congress has recognized the necessity of providing commercial and Government facilities for the construction of naval vessels. The restrictive effect of the provision carried in the annual appropriation act has been to concentrate the manufacture of a number of items in Government yards, with insufficient facilities for wartime expansion and with no facilities or experience being maintained by private plants. We have thus drifted into a situation which is highly dangerous and might prove to be a fatal defect in time of war. The additional language requested will permit the Secretary of the Navy to determine what contracts should be let to private plants in order to avoid a situation which will be detrimental to the national defense.


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Continuing studies of public works requirements are made by the Navy Department. The items selected for inclusion in the estimates are those considered of the highest priority and are urgently needed. They continue the development of ship berthing and overhaul facilities at Pearl Harbor, provide for continuing the development of Alameda, and provide quarters at Coco Solo, Balboa, and Norfolk, and provide for a medical center at Washington. The shore facilities must be expanded to meet the increasing needs of the fleet and to provide quarters for naval personnel in isolated stations.

Lack of sufficient funds to transfer essential civil personnel overseas causes embarrassment and reduces efficiency out of all proportion to the sums involved. The funds included in these estimates are all required if such embarrassment is to be avoided.


Recent reports indicate that outside wages are increasing, so that the differential of 30 to 40 percent existing a few years ago and up until recently, is now about 14 percent. It is possible that outside wages will reach the general level of Navy wage scales during 1939, in which event the Navy Department will be required to revise its wage scale.


Mr. Edison. We are forced by law to convene the wage board and pay prevailing wages whenever our wages are out of line with the prevailing wages in private industry.

Mr. UMSTEAD. Well, they would not be out of line if prevailing wages were just on a parity with the Navy's wage scale, would they?

Mr. Edison. Not on a parity, but suppose they went by it?

Mr. UMSTEAD. In determining that parity do you consider such things as steady employment, annual and sick leave, which the navyyard employees are entitled to, over and above the benefits accruing to labor outside of the navy yards?

Mr. Edison. I am not sufficiently familiar with the operations of the wage board, because one has never been convened during my tenure up to date. There has been such a wide disparity between wages paid in the navy yards and those paid outside ever since 1929, you might say, that there has been no necessity for even considering calling the wage board. Congress "pegged" the wages of navy-yard workers at the figures prevailing in 1929.

Mr. UMSTEAD. At least it has not reached the stage where it is necessary for us to take any action about it now?

Mr. Edison. I think not; and under present business conditions, I have grave doubts, real doubts, as to whether it will be necessary possibly throughout next year. If business conditions improve, however, and we run into another period of prosperity, in the spring, and from there on, these outside wage scales may force us to convene this Wage Board and they will adopt their usual and customary routine as to how they determine wages.

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br te The title to the Alameda Naval Air Station, free of all encum-
stimate brances, was turned over to the Navy Department by the city of
Teeded Alameda on the 26th of November 1937, at a cost of $1.
1 facil

Mr. Thom. Due to the efforts of this committee, your Depart-
ment was willing to spend $150,000 to clear the title out there, but

we stopped it. We saved $150,000. facit

Mr. Edison. Well, that is very good news. and The Navy Department arranged the terms of the transfer in con

sultation with the Attorney General in accordance with the terms of

the authorizing act. The Curtiss-Wright claims to the title were portio

liquidated by funds contributed for that purpose by the San Fran-
cisco Bay community. It is the intention of the Navy Department
to start as soon as practicable with the construction of this station,
using the $1,000,000 carried in the 1938 Naval Appropriation Act for

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that purpose.

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The increase in operating planes during the past 3 years and the further increase planned for 1939 has required the procurement of additional shore facilities for their overhaul, and the training of the personnel. The adjustment of shore facilities to keep pace with the additional planes will continue for several years.


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Mr. UMSTEAD. Mr. Secretary, I understand that you have recently reorganized your office by creating an advisory or consulting staff composed of certain sections. Will you give us the names of the sections and the general purpose of the new arrangement ?

Mr. Edison. In order to facilitate the business of my office, I have prepared and issued a functional organization outline for the information and guidance of the bureaus and offices of the Department, and to indicate the flow of detailed matters to and from the Assistant Secretary

This organization outline contemplates the inclusion of staff funcof tions of an advisory and consulting character in the Shore Establish

ments Division, in addition to other duties performed by this Division, which are provided for in existing general orders.

This organization outline also effects a consolidation of the related functions, previously exercised by this Division, into four major sections that will operate under the director of the Shore Establishments Division. By the addition of these staff functions to the other work formerly handled by the Shore Establishments Division, detailed liaison between the Department bureaus and offices and the Assistant Secretary will be facilitated.

This organization will not affect any existing laws, general orders, or regulations pertaining to the Assistant Secretary of the Navy or the Shore Establishments Division, nor does it in any way alter the present legal responsibility or authority of other Department bureaus and offices.

The organization as it is at present planned may be changed in respect to detail from time to time, as experience may


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