On October 4, 1949, we received a letter from the Underwriters' Laboratories, Inc., addressed to Mr. J. G. Wehrwein, Director of Development, Sunroc Refrigeration Co., Glen Riddle, Pa.

DEAR MR. WEHRWEIN: This is in answer to your letter of September 15 which the writer received upon return to the office.

Your understanding of the expression "Listed by Underwriters' Laboratories, Inc." is correct. Since many users of the Laboratories' services through advertising in catalogs, et cetera, carry to the public advices concerning our findings with respect to their products and because there are variations in the significance of these findings a policy has been established with reference to the work of Underwriters' Laboratories, Inc., in client literature.

"Approved by the Underwriters" presumably has a direct reader appeal. The Laboratories' counsel advises that its formal use of the word "approved" to summarize its findings is inadvisable because it suggests a scope for its review and contact with products that is not attempted. Acting on these advices, the Laboratories, some years ago, abandoned formal use of the word "approved" on listing cards and elsewhere and its general practice is to avoid use of the term in formal correspondence and conference.

Consequently, when requested by clients to "edit" their proposed statements, its endorsement of the use of the word "approved" is not appropriate. We do not normally censor the advertising of subscribers, but when advertisements of clients or others misrepresenting the facts relative to listing and/or service are brought to our attention, we make every reasonable attempt to have the copy corrected.

Yours very truly,

G. H. POPE, Assistant Secretary.

Mr. KEATING. Is this a private or a governmental agency?
Mr. MORRISON. This is a private agency.

Mr. KEATING. Have you brought those facts to the attention of the Federal Trade Commission?

Mr. MORRISON. Not yet; no. As I say I am coming around to this. Now the place where this hurts is not so much in the Federal Government, but in State governments where Westinghouse will convince someone that they should put in a question, "Are your water coolers approved by Underwriters?" Fill in the blocks, "Yes" or "No." We have put in "No," and then put in a copy

Mr. KEATING. Does Westinghouse put in "Yes"?

Mr. MORRISON. Oh, yes; and they then enclose this as proof of it. This is their literature.

Mr. BRYSON. Is that not in violation of the law?

Mr. MORRISON. When you have to do that with a product

Mr. KEATING. I think that should be referred to the Federal Trade Commission.

The CHAIRMAN. It should be brought before the Federal Trade Commission.

Mr. MORRISON. It is unfortunate when a man, dignifying himself by calling himself a man, has to resort to that sort of thing in trying to sell a product. It means he does not have enough merit in his product to sell it.

The CHAIRMAN. Mr. Morrison, as chairman of the committee, I am going to order that our general counsel submit a transcript of your testimony to the Federal Trade Commission, and another transcript to the Antitrust Division of the Department of Justice.

I am going to suggest the following: I think you ought to ask for a hearing before the Munitions Board so that this whole matter will be aired. If you are refused any appearance before that Board, or a hearing, I would appreciate you letting this committee know.

Mr. MORRISON. Yes, sir; thank you.

Now may I ask for a little free advice while I am here? I have two attorneys, one on one side of the fence and one on the other. My general attorney is George Wharton Pepper, and the other attorney is Randolph Paul. I would not dare do anything without them.

My question is, Should I be represented at a meeting of that sort by counsel?

The CHAIRMAN. I think you should ask Mr. Pepper.

Mr. BRYSON. I do not believe a man of your intelligence needs to have anybody with him.

Mr. MORRISON. Thank you very much.

The CHAIRMAN. We are very appreciative of you testimony, Mr. Morrison.

Mr. MORRISON. Would you be interested in hearing a word or two about this from Mr. Richard Lyon? General Brannon is here.

Mr. Lyon is the president of the Capitol Sunroc Agency, which is a separate corporation, with separate ownership, and I would like to have him tell you something regarding this quartermaster business. I think he could give you in very short time, in a few words, something that would be material to this discussion. I do not want to impose upon you.

The CHAIRMAN. All right, Mr. Lyon. I hope you will be very brief.

STATEMENT OF RICHARD LYON, PRESIDENT, CAPITOL SUNROC AGENCY, INC.

Mr. LYON. Thank you, Mr. Chairman.

I am speaking with particular reference to the Army quartermaster procurement which Mr. Morrison mentioned briefly.

He brought to the attention of the committee the alleged verbatim transcript of Westinghouse commercial data, which had been incorporated into the Chicago Quartermaster Purchasing Office's invitation for bids, QM11-183-50-44.

When I formed my little company, the Capitol Sunroc Agency, Inc., to handle the Sunroc Co.'s sales to the Federal Government, effective as of the 5th of August 1949, the only sizable potential procurement for Federal Government sales was this pending invitation for bids from the Quartermaster Corps, and we, as a definite small business, being composed of four stockholders-three veterans and my wifewere quite anxious and excited about the opportunity of selling the Federal Government approximately 800 electric water coolers.

I want to emphasize the fact that my company has no corporate relationship with the Sunroc Co. We are a distributor pure and simple, where we buy the merchandise from Sunroc and resell it to

our customers.

Now, when we were preparing this bid for the Quartermaster Corps, we had to consult continuously with the Sunroc Co. because of the many ambiguities in the specifications called out, because the Federal specifications OO-C-566b had been modified, by the quartermaster invitation for bids and by three addenda which came out subsequent to the bid invitation of July 21; and finally, 2 days before

the bid opening date, in cooperation with the plant, we drafted our bid for submittal.

It was necessary for us to elaborate in our bid by about four or five pages of alternatives, because since July, when the invitation came. out, the plant had endeavored to get clarifications of existing ambiguities in the invitation, and the only way we could protect ourselves from disqualification because of unresponsiveness was to bid on these alternate bases or possible dual interpretations.

The bids were opened in Chicago on the 29th of September, which bid opening was attended by Mr. J. R. Campbell, my general manager. At the time of the opening, it was indicated in the feeling around the bid room that there was going to be another battle between Sunroc and Westinghouse, which had first taken place on the Treasury procurement schedule; but Westinghouse, when its bid was opened, did not attempt to meet the ambiguities of the specifications, but merely, on the face of its bid, quoted certain commercial models by giving the model number, WA7A, WA13A, or WW22, and attaching to its bid its standard commercial specification sheets.

Now, at the outset, as soon as the bids were opened, and we realized what Westinghouse had done. Mr. Campbell brought up the point, right in the bid room, that the quoted Westinghouse model WW22, which it had bid on item 4 of the invitation, was a single-wall construction cooler, which clearly did not comply with the specifications .as called for by the Quartermaster Corps.

Mr. KEATING. And that the bid was therefore informal?

Mr. LYON. The bid was unresponsive to the invitation, sir. That was our position from that very minute on which the bids were opened. We contended that, and we instructed Mr. Campbell to take down a verbatim transcript of the Westinghouse bid, which opportunity was refused Campbell by the people out in Chicago because they stated that they wanted to analyze and digest and abstract the bids, but he was able to summarize the pertinent information from Westinghouse bid, and if you will bear with me, I would like to read what Westinghouse says. It said:

Products offered are from production for domestic trade and are regularly carried in stock. The service guaranty as provided for in addendum #3, paragraph 13, if required, add $5 to the price of each cooler. Packing of coolers is Westinghouse standard packing. Water cooler is not wrapped in kraft paper, but is contained in a material that has undergone the 275-pound test.

Now, as soon as we saw that Westinghouse was quoting, in our opinion, its commercial models, by incorporating by reference in its bid the model numbers, and the commercial specification sheets which referred to the same model numbers, we proceeded to obtain those models in the open market, and to break them down at the plant at Glen Riddle, which break-down of the models was attended by my general manager, Campbell.

I am not an engineer; I am a lawyer.

In the course of the breaking down of these Westinghouse coolers, and comparing the internal construction of the coolers with the applicable specifications, a number of deviations were disclosed between the models that Westinghouse had quoted in its bid, and the specifications that it was bidding against.

As soon as we ascertained these deviations, we called up, long distance, the Chicago Quartermaster office, because supposedly the award was going to be made on the 10th of October.

I spoke to Mr. Luther Clayton, the special assistant to the head of the Chicago Purchasing Office, and advised him that Mr. Campbell, my manager, was coming out there with this broken down model of a Westinghouse cooler, to point out the physical deviations between that model and the specifications, in justification of our position that the Westinghouse bid was unresponsive.

I talked to Mr. Clayton on Friday, October 7, and told him that Mr. Campbell was en route, and asked him over the telephone to hold up any pending award under this current invitation until my man Campbell had had an opportunity to be heard.

Over the week end, on a Sunday, Mr. Campbell, as I recall, packed the Westinghouse cooler into the back of a car and drove all night to Chicago.

He was out there on the morning of Monday, October 10. He made every effort to have an audience, to disclose to the people out there the physical deviations.

I know Campbell well, and he is quite a vociferous gentleman, and he is a fighter, and he said, "See, I have here physical evidence of the fact that the quoted models have these apparent deviations, they are not just minor; they are basic. There are variations in material, when nonferrous was called for, they supplied ferrous."

There were many details which we have listed in a subsequent protest. Campbell told me over the long-distance telephone later in the day that it looked like the award was going to be made to Westinghouse, so I proceeded to send a telegram on the 10th, which reads as follows:

We protest award on bid QM11-183-50-44 to Westinghouse Electric Corp. on the following alternative grounds: One, quoted Westinghouse models do not conform to the specifications. Two, if the quoted Westinghouse models are determined by the Army to be in conformity with the specifications, such specifications were deliberately drafted to call for the quoted Westinghouse models, and are therefore restrictive, partial, and illegal. A letter elaborating on these grounds of protest is en route to you via registered air mail special delivery. Request award be held up or withdrawn pending full investigation of this matter. For your information the Quartermaster General simultaneously is being advised of this request.

I proceeded to forward a letter, which is too long to take your time. to read, but I will be glad to put it into the record. (The letter referred to appears as follows:)

Via: Air mail-special delivery-registered.
Subject: Invitation for bids No. QM-11-183-50-44.

COMMANDING OFFICER,

Chicago Quartermaster Purchasing Office, Chicago, Ill.

OCTOBER 10, 1949.

DEAR SIR: We have been advised by your special assistant, Mr. L. E. Clayton, that the Chicago Quartermaster Purchasing Office is in the process of making an award, under the subject Invitation for Bids, to the Westinghouse Electric Corp.

We are hereby lodging an official protest against the making of such an award to the Westinghouse Electric Corp., such protest being predicated upon the following grounds:

A. The Westinghouse models quoted in its bid, opened September 29, 1949, do not conform to the Federal specification for coolers, drinking-water, electric, 96347-50-pt. 2B-10

No. 00-C-566b, dated July 31, 1947, as modified by the exceptions set forth in the subject invitation and in addenda 1-3 thereto. Some specific instances of nonconformity are enumerated below, as follows:

1. Under paragraph C-1, it is stated that the material shall be new and suitable for the purposes. We find that the cooling coils and tank are supported by wooden plugs which are not protected against deterioration.

2. We also find that under paragraph C-1a, the screws used to hold certain parts together will not conform to the specifications. In the invitation for bids, the insertion of paragraph D-2a is attached to this specification 00-C-566b, wherein the refrigeration system shall be entirely hermetically sealed and made so that it is tamper-proof and no repairs can be made in the field. Under our findings, the average refrigeration mechanic could repair this system and we feel that the system (as Westinghouse has built it) does not conform to the inserted specification.

3. Under paragraph D-6d, it is stated that the regulator shall be conveniently located. We find that in order to adjust the stream of the Westinghouse cooler, you have to remove the front panels, and we feel that it does not meet the specification in this instance. In the same paragraph, D-6d, it is stated that the regulator and the stop valve shall be located so that it shall not be necessary to break the main insulation to gain access for repairs. We find that the top of the cooler and the top of the insulated lowside plus all of the insulation has to be removed in order to make repairs to the water-pressure regulator.

4. Under paragraph D-7, the specifications call for a glass-filler suitable to fill a pitcher 11 inches high. The glass-filler used by the Westinghouse coolers measure 101⁄2 inches in the clear so that an 11-inch pitcher will not fit underneath the spout.

5. Under paragraph D-9a, it is stated that all water connections to the tank shall be copper, brass, or other nonferrous tubing and shall be silver brazed or equal to the tank. We find in the Westinghouse cooler that they are soft soldered dipped.

6. In paragraph D-9b, it is stated that a refrigerant coil shall be copper or nonferrous tubing. We find in the Westinghouse cooler, in certain sections of the refrigerant system, that a ferrous tubing is used. Furthermore, the refrigerant coil is not continuously bonded.

7. In paragraph D-13b, it is stated that the drain fitting at the rear of the cooler shall be not less than 11⁄2 inches iron pipe size; we find on the Westinghouse cooler that the drain fitting from the water-cooled condenser is %-inch iron pipe size. In connecting the %-inch drain and the 11⁄2-inch drain together if this is done by the user and an air brake is not installed in this connection, then the cooler will not meet with the plumbing code and the chances are, if the drain backs up and the water was shut off, all of the drinking-water system would be contaminated.

8. Under paragraph D-15e, the specification calls for a factory test pressure. The specification does not call for any said number of pounds in the factory test pressure, but under paragraph F-2a, the specification states that the refrigerating system should be tested on each cooler to at least 235 pounds on the highpressure side and 145 pounds on the low-pressure side. The Westinghouse cooler does not conform to these pressures, as stated in the specification, for their plates only state a 200-pound test pressure.

9. Under paragraph H-3b, it is stated that the wrapping paper shall be of not less than a 60-pound basis weight kraft paper. We find that the surrounding paper on the top portion of the cooler only has about a 20-pound-weight paper. The overlaps of this paper, as stated in this paragraph, H-3b, should have been sealed with a 21⁄2-inch width, 60-pound-basis weight kraft paper. We found that the paper was sealed together with a 4-inch masting tape which had a weight of about 25-pound-basis weight.

10. The Westinghouse model WW22 cooler is of the water-cooled type and does not conform to the original specification or any of its amendments, as the refrigerant and water-bearing parts are only separated by a single-wall thickness of metal.

11. In the literature supplied by the Westinghouse Electric Corp. on their model WA7A cooler, the capacity shown, for a 90 degree ambient room with an inlet water temperature of 80 degrees F. and an outlet temperature of 50 degrees F., is 7.2 gallons per hour with a 60-percent spill of the water through the precooler. The quoted Westinghouse cooler, as proven by tests we have made, does not meet the manufacturer's own specification.