Mr. TOLAND. With regard to the fire-damage contract, do you recall the amount of time that you thought should be necessary for the contractors to have a reasonable opportunity to submit a bid?

Lieutenant DAVIDSON. It was our policy to request 10 days to 2 weeks on all contracts.

Mr. TOLAND. Did you in that particular instance; do you recall? Lieutenant DAVIDSON. I can't recall that we specifically requested any time. August 7, as I recall, was satisfactory.

Mr. TOLAND. Lieutenant, how long have you been on duty?
Lieutenant DAVIDSON. Since December 30, 1940.

Mr. TOLAND. What other assignments have you had other than the Cramp Shipyard since you were called to duty?

Lieutenant DAVIDSON. I was ordered to active duty at the New York Ship Co., Camden, and reported there on December 30, 1940, and was transferred over to Cramp Shipbuilding at Philadelphia on January 13, still under the supervisor at Camden; and then detached from the supervisor at Camden on February 10, and reported to the supervisor at Philadelphia on that date.

Mr. TOLAND. Now, Lieutenant, I show you directives of the Navy Department with regard to the requirements of supplemental contracts for the national defense shipbuilding program, and ask you if you have ever seen those before, and if they are the requirements of the Navy Department with regard to bids?"

Lieutenant DAVIDSON. Yes, sir; I have seen these. They are instructions for the administration by the supervisor's office in connection with supplemental contracts for acquisition and installation of special additional plant facilities.

(The directives were received in evidence, marked "Exhibit No. 247," and are filed with the committee.)

Mr. TOLAND. Those regulations cover prime contractors and subcontractors, do they not?

Lieutenant DAVIDSON. Yes, sir; that is discussed in there.

Mr. TOLAND. The Cramp Shipbuilding Co. is a prime contractor for the Navy Department, isn't it?

Lieutenant DAVIDSON. Yes, sir.

Mr. TOLAND. Isn't it a fact that on the facilities that are being built under the contract with the Government, the Cramp Shipbuilding Co. is required to submit cost sheets monthly to the Navy Department?

Lieutenant DAVIDSON. Reports of expenditures; yes.

Mr. TOLAND. Reports of expenditures in connection with the construction of these facilities?

Lieutenant DAVIDSON. Yes, sir.

Mr. TOLAND. Have you ever examined any of the contracts between the Cramp Shipbuilding Co. and the Navy Department, the emergency plant facilities contract.

Lieutenant DAVIDSON. The emergency plants facilities is a supplemental contract and I have examined that.

Mr. TOLAND. What is your understanding with regard to the construction or the rehabilitation of the facilities? I show you the printed contract and ask you if that is the contract that you have examined, or a copy of the contract?

Lieutenant DAVIDSON. No, sir; this is the loan agreement. This is a copy, but I don't know that it is verbatim.

Mr. TOLAND. Then I won't offer it.

What is your understanding with regard to who is to pay for the cost of the facilities?

Lieutenant DAVIDSON. It is my understanding that when the final cost certificate is issued the Government reimburses in 60 equal installments, 60 monthly, equal installments.

Mr. TOLAND. And that amount is $12,000,000, isn't it?
Lieutenant DAVIDSON. Roughly.

Mr. TOLAND. Approximately $12,000,000. How far has the facilities contract for rehabilitation proceeded? How near through is the Cramp Shipbuilding Co., so far as you know, with the rehabilitation program?

Lieutenant DAVIDSON. At the present time?

Mr. TOLAND. Yes.

Lieutenant DAVIDSON. I think the last monthly report showed 97 or 98 percent. I can't quote that figure.

Mr. TOLAND. Practically completed now, is it not?

Lieutenant DAVIDSON. Yes, sir.

Mr. TOLAND. Under this loan agreement, when the certificate is issued or filed, then the Government, in 60 equal payments, will pay to the Cramp Shipbuilding Co. the cost of the construction or the rehabilitation program?

Lieutenant DAVIDSON. There are some options.

Mr. TOLAND. The company has an option to purchase or lease the buildings and the property?

Lieutenant DAVIDSON. I believe the option is to purchase.

Mr. TOLAND. The title of that property right now is in the Cramp Shipbuilding Co., is it not?

Lieutenant DAVIDSON. Yes, sir.

Mr. TOLAND. And under that agreement, if the company purchased it, is it less depreciation?

Lieutenant DAVIDSON. That is my understanding.

Mr. TOLAND. That is all.

Mr. Beal and Mr. Minor.

The ACTING CHAIRMAN. Raise your right hands, please. Do you solemnly swear that the evidence you are about to give the House Naval Affairs Committee is the truth, the whole truth, and nothing but the truth, so help you God?

Mr. BEAL. I do.

Mr. MINOR. I do.

TESTIMONY OF WALTER HUBERT BEAL, PENN JERSEY SHIPBUILDING CORPORATION, AND W. T. MINOR, CRAMP SHIPBUILDING CO., PHILADELPHIA, PA.

Mr. TOLAND. Mr. Beal, will you tell the reporter your full name? Mr. BEAL. Walter Hubert Beal.

Mr. TOLAND. Where do you reside?

Mr. BEAL. 1233 Remington Road, Wynnewood, Pa.

Mr. TOLAND. What is your present business or occupation?

Mr. BEAL. Chairman, Penn Jersey Shipbuilding Corporation.

Mr. TOLAND. How long have you been connected with that company? Mr. BEAL. Since its reorganization, September 1, 1941.

Mr. TOLAND. You have been in the shipbuilding business long?
Mr. BEAL. For about 3 or 4 years prior to that.

Mr. TOLAND. Did there come a time when the Cramp Shipbuilding Co. employed you to make an investigation?

Mr. BEAL. Last fall-along in October, as I remember.

Mr. TOLAND. Will you tell the committee what the employment was, who employed you, and the purpose of it?

Mr. BEAL. Mr. Ripley called me on the telephone from New York and asked whether it would be possible for me to make an analysis of the Cramp Co. He was leaving at that time for California and it was impossible for us to get together for me to know what was involved. He asked me to see Admiral DuBose, which I did. The admiral told me that there were some apparent irregularities on bidding under the facilities' contract, and he wanted me to take the time to see if I could find out what the trouble was, if any, and to report to the company on it.

Mr. TOLAND. When did you start, do you recall?

Mr. BEAL. Very shortly after Mr. Ripley and the admiral contacted me, which I think was the fore part of October last year. I don't recall the exact date.

Mr. TOLAND. How many actual days did you spend on the survey? Mr. BEAL. From that time until the end of the year, or sometime. in January. I don't recall exactly.

Mr. TOLAND. About how long was that-2 months, 3 months, a month and a half?

Mr. BEAL. About 212 months or 3 months.

Mr. TOLAND. You devoted all your time every day?

Mr. BEAL. No; I did not devote all of my time. I had my own business to operate.

Mr. TOLAND. I am trying to find out just exactly, during that period of time, how many days you actually put in on this survey.

Mr. BEAL. If I had my records here, I could tell you, Mr. Toland. Mr. TOLAND. Can you tell it from the report?

Mr. BEAL. No; I cannot. There was hardly a day that I didn't work on it, and over the week ends.

Mr. TOLAND. I am trying to find out how many days, and not trying to pin you to the exact number, but your best recollection as to the exact number of days you were at Cramp; not working at some other place, but the exact number of days you put in at the Cramp Shipbuilding office in making your survey.

Mr. BEAL. I would have to give you that entirely from memory. Mr. TOLAND. Give me your best guess, your best recollection. Mr. BEAL. I imagine I was at Cramp 15 or 20 of the days.

Mr. TOLAND. All day long?

Mr. BEAL. No; not necessarily all day long.

Sometimes in the

afternoon to 7 or 8 or 9 o'clock at night; sometimes in the morning. Mr. TOLAND. How many days would you say averaging 8 hours

that you actually took in making the survey?

Mr. BEAL. I wouldn't hazard a guess, because I don't know.

Mr. TOLAND. Would you say it would be 10 or 15 days?

Mr. BEAL. No; it was considerably more than that.

Mr. TOLAND. I am trying to find out how much time you actually spent at Cramp in making the survey, not when you were working

on it away from Cramp, but how many actual days of 8 hours did. you spend at Cramp during the period of the 22 to 3 months?

Mr. BEAL. I don't think I can tell you. I say, I was at Cramp some 15 or 20 times. The number of hours I was there, I do not remember.

Mr. TOLAND. You say 15 or 20 times you were there?

Mr. BEAL. I think that is correct.

Mr. TOLAND. What is your best recollection as to the greatest length of time that you were there, and the smallest amount of time that you were there on those 15 or 20 occasions?

Mr. BEAL. Well, maybe the shortest was an hour or 2 hours, 3 hours, and the longest, maybe, 8 or 10 hours.

Mr. TOLAND. What did you do? Tell us what you did, whom you saw, what records you examined. Did you have any help? Mr. BEAL. I utilized Mr. Minor on the instructions of Admiral DuBose to collect certain information for me.

Mr. TOLAND. What was the result of your survey? Tell us what you found.

Mr. BEAL. It is very completely covered in my report, Mr. Toland. Mr. TOLAND. I know it is, but can you tell us in substance what you said in your report? I don't want to take the time to read the whole report.

Mr. BEAL. In substance there was evidence of irregularities on the part of subcontractors' bids.

Mr. TOLAND. Did you find any evidence on the part of the company that collusive bids or complimentary bids or identical bids were likewise submitted to the company itself in connection with its contracts?

The ACTING CHAIRMAN. Which company do you mean, Mr. Toland? Mr. TOLAND. Cramp.

Mr. BEAL. State that again please?

Mr. TOLAND. Did you find also the same situation exitsed so far as the company was concerned, that complimentary bids or collusive bids were submitted to the company-not to Rohleder but to the company itself?

Mr. BEAL. No; I did not. As a matter of fact, I made no investigation of bids directly to the company.

Mr. TOLAND. So, your investigation was directed solely to the question of the complimentary or false bids, or irregularities in bids with regard to the subcontractors of the general contractor of the Cramp Co., is that right?

Mr. BEAL. That is right.

Mr. TOLAND. Now, Mr. Minor, you made a survey, did you not? Mr. MINOR. Yes, sir.

Mr. TOLAND. You are an employee of Cramp?

Mr. MINOR. Yes, sir.

Mr. TOLAND. What is your job?

Mr. MINOR. I am a research man in the office of the president. Mr. TOLAND. You work for Admiral DuBose?

Mr. MINOR. Yes, sir.

Mr. TOLAND. What was your experience prior to the time you went with Cramp?

Mr. MINOR. After I got out of Harvard Graduate School of Business Administration, I went to the investment counsel firm of Stand

ish, Ayer & McKay, Inc., in Boston, and I was research man there for 4 years; and in that work I did a good deal of investigation work in investment and economic matters which involved going into the field and interviewing corporation executives, and work of that type.

Mr. TOLAND. Who was it asked you first to make an investigation at Cramp?

Mr. MINOR. Admiral DeBose called me in after Captain Hanson's letter of September 11 came in, and asked me to go into the matter and see what I could find out.

Mr. TOLAND. How long did it take you to make it?

Mr. MINOR. The length of time was the difference between a couple. of days after Captain Hanson's letter arrived and the date of my report.

Mr. TOLAND. September 27. Is this a copy of it?

Mr. MINOR. Yes; that is right.

Mr. TOLAND. Now, Mr. Beal, I show you what purports to be your report of your survey, and ask you to examine it and state for the committee whether the statements contained therein are true and accurate?

Mr. BEAL. I don't think I have to examine it. They are true and accurate as far as I was able to determine-to the best of my ability to determine.

Mr. TOLAND. And Mr. Beal, wherever the report reflects the statements of other individuals, the statements that were made by other individuals to you are true, are they not?

Mr. BEAL. Do you mean did they come out of my own mind or are they matters of record as given me?

Mr. TOLAND. No. The statements made to you in the course of your survey that are reflected in the report, of others than yourself, are true and correct, are they not?

Mr. BEAL. Right.

Mr. TOLAND. And the same thing is true about your report, the statements are true and accurate, Mr. Minor?

Mr. MINOR. Yes, sir.

Mr. TOLAND. Mr. Beal, do you know that a copy of your report was submitted to Captain Weyerbacher?

Mr. BEAL. I learned of it afterward.

Mr. TOLAND. Were you informed that the Commander is reported to have said that he obtained statements from people whom you referred to in your report, in which they denied making the statements that you stated they did make?

Mr. BEAL. No.

Mr. TOLAND. I offer these reports in evidence.

(The document entitled "Report Covering Investigation and Analysis of Cramp Shipbuilding Co.," prepared by W. H. Beal, dated December 31, 1941, was received in evidence, marked "Exhibit No. 248" and is printed in the appendix of this volume.)

(The exhibits attached to exhibit No. 248 were received in evidence, marked "Exhibit No. 248A," and are filed with the committee.) (Survey prepared by W. T. Minor dated September 27, 1941, was received in evidence, marked "Exhibit No. 249" and is printed in the appendix of this volume.)

Mr. TOLAND. By the way, were you paid?