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Commander WEYERBACHER. That is what Mr. Reed told me.
Mr. TOLAND. What did Mr. Ripley say to you?

Commander WEYERBACHER. I don't recall the conversation. Mr. Ripley can answer that.

Mr. TOLAND. You have no recollection of what Mr. Ripley said to you?

Commander WEYERBACHER. Except that he had been informed that I was not getting along so well with Reed and he suggested that I go back and talk to the admiral and to Mr. Reed.

Mr. TOLAND. As a matter of fact, have there been any meetings of the board of directors which you have been at or executive committee meetings in the last 6 months at which the question of your duties and qualifications was discussed?

Commander WEYERBACHER. At no directors meeting, because I have attended them all.

Mr. TOLAND. Was there any meeting at all while the members of the staff of this committee were present at which the question of your tenure was concerned or discussed?

Commander WEYERBACHER. Not to my knowledge, at the meeting. Mr. TOLAND. Not at the meeting?

Commander WEYERBACHER. No.

Mr. TOLAND. Wasn't there a general dissatisfaction on the part of Mr. Reed and Mr. Ripley as to the way you were conducting yourself in your department?

Commander WEYERBACHER. There may have been to Mr. Reed, but not as far as I know to Mr. Ripley at that time.

Mr. TOLAND. I would like to offer this in evidence, Mr. Chairman. This is another letter of Mr. Reed, taken from his file, dated the 3d of July.

The ACTING CHAIRMAN. Is that very lengthy, Mr. Toland?
Mr. TOLAND. It is one page.

The ACTING CHAIRMAN. Do you want to withhold that?

Mr. TOLAND. May I?

Because I have a request

The ACTING CHAIRMAN (interposing). Withhold that, and you can put that in the record and read it when we reconvene at 2 o'clock. Mr. TOLAND. Two o'clock.

The ACTING CHAIRMAN. The committee will recess until 2 o'clock. (Whereupon, at 12:15 p. m., the committee recessed until 2 p. m. the same day.)

AFTERNOON SESSION

Following the noon recess, the committee hearing reconvened at 2: 10 p. m., Representative Michael J. Bradley, Pennsylvania, acting chairman.

The ACTING CHAIRMAN. The committee will resume its sitting. Mr. Toland.

Mr. TOLAND. Yes, Mr. Chairman. Commander Weyerbacher.

Commander, this morning, before lunch, I put in the record a letter of the supervisor of ships, Commander Hanson, in which he stated that you had written a letter recommending Admiral Harris be awarded the contract, and my recollection is that you said you never wrote such a letter.

Commander WEYERBACHER. To the best of my knowledge and belief, I have written no letter.

Mr. TOLAND. I show you a copy of a letter dated September 24, 1941, from you to Admiral DuBose, and ask you if you didn't dictate and send to the admiral the original of that letter?

Commander WEYERBACHER (examining paper). Yes; I remember that now.

Mr. TOLAND. So you do recall it?
Commander WEYERBACHER. Yes.

Mr. TOLAND. I offer it in evidence.

(The letter was received in evidence and marked "Exhibit No. 271.") Mr. TOLAND. And the letter does contain a recommendation on your part?

Commander WEYERBACHER. Yes.

The ACTING CHAIRMAN. Will you read it, Mr. Toland?
Mr. TOLAND. All right.

R. D. Weyerbacher

W. G. DUBOSE,

Repair Yard,

Engineering Service.

[Reading:]

Recommendation for NOd-2247. September 24, 1941.

Enclosed is a summary of the proposals received for engineering services in connection with the repair yard. The three proposals are from reputable and experienced firms of engineers, any one of whom are qualified to design and supervise the construction of the repair yard, particularly the proposed dry dock. Frederic R. Harris has a large organization and we believe he has more engineers experienced in this type of work than either of the other two firms. Both a floating drydock and a graving dock are to be considered, and each type will require some preliminary study. If a floating drydock is to be built, Frederic R. Harris asks a fee of $142,500, and the corresponding fees asked by the other two firms are considerably higher. If a graving dock is to be built, Frederic R. Harris asks a fee of $182,000, and Crandall Dry Dock Engineers, Inc., asks a fee of $181,000, a difference of only $1,000. The fee of the third firm is very much higher. The Frederic R. Harris proposal for floating dry dock is much the lower fee, but if a graving dock is to be installed there is only a very small difference between his and the Crandall Dry Dock Engineers' fee.

It is recommended that the proposal of Frederic R. Harris for engineering services in connection with the repair yard be accepted. The amount of the fee to be either $142,500 or $182,000, depending on the type of drydock to be installed. The difference is entirely in division C, covering work of assistants in letting contracts, approval of contractors' drawings, and field inspection. It is important that a contract be made for these engineering services as soon as possible, and before a decision is reached as to the type of drydock to be built. Frederic R. Harris is now engaged by the Navy Department on work of a similar character, and it is believed that he would prepare a more economical design and in quicker time than either of the other two firms.

What kind of a dock was built?

R. D. WEYERBACHER.

Commander WEYERBACHER. The contract, the letter of intent directing the contractor to proceed, was issued this week. Construction will start in the near future.

Mr. TOLAND. For what kind of dock?

Commander WEYERBACHER. A graving dock.

Mr. TOLAND. And the fee of Admiral Harris to build the graving dock was not the lowest bidder. Is that right?

Commander WEYERBACHER. It is $1,000 more than the Crandall bid. Mr. TOLAND. It was not the low bid?

Commander WEYERBACHER. No; it was not the low bid.

The ACTING CHAIRMAN. What were the two bids, Mr. Toland?

Mr. TOLAND. The bid of Admiral Harris was $182,000; the bid of the Crandall Dry Dock Engineering, Inc., was $181,000, so that in that instance the low bidder did not receive the bid. Is that right? Commander WEYERBACHER. In our judgment the lowest responsible bidder for that work.

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Mr. TOLAND. Well, let me see that exhibit. Didn't you say they were all responsible? Didn't you make the statement in here that any one of them was qualified to design this construction?

Commander WEYERBACHER. There is another paragraph there. Mr. TOLAND. Didn't you say that "the three proposals are from reputable and experienced firms of engineers"?

Commander WEYERBACHER. Yes.

Mr. TOLAND. "Any one of whom are qualified to design and supervise the construction of the repair yard, particularly the proposed drydock"?

Commander WEYERBACHER. Yes.

Mr. TOLAND. Didn't you make that statement?

Commander WEYERBACHER. But there is another statement there about the speed and economy of design.

Mr. TOLAND. The point is, is it your testimony, then, that the Crandall Co. is not qualified to do this work?

Commander WEYERBACHER. No; I did not say that.

Mr. BATES. Mr. Chairman, let me interject at this moment, Mr. Toland, to get a little background to this hearing. Have you stated to the committee just what your object is in the cross-examination of this witness, and what you are trying to prove? I don't think you were

Mr. TOLAND. I did that in executive session. I don't think there that day.

Mr. BATES. No. The only point is, I note in this examination now the difference of $1,000 in a $180,000 contract.

Mr. TOLAND. Yes.

Mr. BATES. Unless you have some other real objective behind it, I think it is quite picayunish to lay too great emphasis on that point. Mr. TOLAND. Well, the record speaks for itself, Congressman, on the whole thing.

Mr. BATES. I am speaking of this one question. This committee is just struggling for time to give to this meeting, and I think we ought to go into larger spheres of activity if we have them available and not quibble over a $1,000 job. If we have something really worth while I am just willing to give any time to it, unless you can find a conclusion. Mr. TOLAND. Is it your position, then, Mr. Congressman, that the question of the amount is determining as to whether there has been a violation of the law or regulations?

Mr. BATES. Questions of violation are involved, but I understand this is a private organization which has entered into a contract for any reasonable sum of money to carry out a specific kind of work. From what I know, from long experience myself in construction work, there is a wide variation of opinion as to whether or not you should pay a higher price for a given job if you can do it more efficiently and have more confidence in the organization that is going to do the work. If there is violation of the law, that is another matter. Is there a question of violation of law involved?

Mr. TOLAND. Of course, the regulation of any department of the Government has the force and effect of statute, and any violation of that regulation is a violation of the law, and if the regulation of the department requires three bids and that the contract be awarded to the lowest bidder

to

Commander WEYERBACHER (interposing). I recommended the award

Mr. TOLAND (interposing). I will ask you questions; now you keep quiet.

Mr. BATES. There is no criticism of your examination, Mr. Toland. I am just trying to get the background before we proceed.

Mr. TOLAND. We have had numerous witnesses, and I don't think that you have been here all the time during this hearing.

Mr. BATES. That is right.

Mr. TOLAND. We have shown many bids that were false, signed without the authorization of the representative, and in a manner, if it is determined by the proper agency, that the conduct of the people of this company resulted in a defrauding of the United States Government. It isn't necessary that there must be established a monetary loss on the part of the United States to establish that the United States has been defrauded. For example, if a judge who is sitting in a court knows both counsel for the plaintiff and counsel for the defendant, and if in passing upon the merits of the controversy he says to himself, "I know these two men and I am going to toss a coin, if it comes down heads I will decide it for A, if it comes down tails I will decide it for B," the United States has been deprived, defrauded of its right to fair and impartial services by that judge, in that his duty is to determine that on the merits. In this instance, and the record so shows, the requirement was that there should be bids to protect the United States and see that it got the best possible price that was available. Now, we have not offered all the evidence that we could have presented, because we would be here for days, but we took a large number of purchase orders and bids and established that many of them were written on the same typewriter. We established that one man signed as president of two companies when he was only connected with one. We established that he signed one bid with his right hand and the bid of somebody else with his left.

Mr. BATES. What you are trying to prove is collusion here.

Mr. TOLAND. Yes; and the general manager and the vice president were in charge of these things.

Mr. BATES. The reason I am interjecting at this moment is because I have asked the chairman what you are trying to prove by an examination of the witness and whether or not you have publicly stated your objective, and he tells me no, that you have not, and that is what I am trying to find out.

Mr. TOLAND. Of course, I did in the executive session, and of course it goes further. It is not only under the resolution, but this committee is directed to determine the efficiency of the program, the cost of the program, and of course in connection with this matter, the problem is very pertinent to the committee under this resolution to determine whether or not the company itself is guilty of gross negligence in

that these things were brought to their attention and in that they did nothing about it. They permitted it to continue, so that it is a ques tion not only of collusive bidding, not only of a violation of the direc tive of the Supervisor of Ships, but it goes to the very roots of the conduct of the affairs of this company, which has got nothing but Government business, Navy contracts, and is to receive, if they exercise their right under the law, within the very near future $12,000,000 from the Navy Department.

Mr. BATES. And because of the extent of that program, I am just wondering why we should go too extensively into a matter involving only a difference of $1,000-just a moment, now-when there is a question of judgment in the mind of the officer in charge as to whether or not it is in the interest of the company to award the contract to a contractor for a contract of that amount.

Mr. TOLAND. In this very contract we showed this morning that the witness had a contract at one time with that contractor whereby he was to get 10 percent of any business that he brought to that contractor, and, of course, the witness stated that he canceled that contract orally. We found the contract in his files, in an active file. There is no written evidence on his part to support the cancelation of the contract.

Mr. FLAHERTY. So that the whole story may be told, there is no record at all of his having received payment.

Mr. TOLAND. That is true; that is what he stated.

Mr. BATES. I don't say this in criticism of the counsel.

Mr. TOLAND. No, no.

Mr. BATES. Because you realize that I like to work along with you, but I don't think we should spend too much time on small matters when you have something larger before you.

Mr. TOLAND. Of course, in all these matters I am not trying them or presenting them like a lawsuit, but I am trying to rely upon docu

ments.

Mr. BATES. You think this is important to this proceeding?

Mr. TOLAND. You take this episode, take the episodes of his conduct that have already been testified to by other witnesses with regard to contracts, and you take one, two, three, or as many items as there may be, and you determine from the collection of items plus the witness' answers or explanations as to whether or not he conducted himself—

The ACTING CHAIRMAN (interposing). There is one thing you stated in your remarks to Mr. Bates that I think we should clarify. There is no question, I believe, with respect to the efficiency of operations at the yard insofar as their shipbuilding program is concerned. Mr. TOLAND. That I don't

The ACTING CHAIRMAN (interposing). Your investigation didn't disclose anything-our investigators didn't disclose anything to that effect.

Mr. TOLAND. That is a problem that I propose to ask the admiral and Mr. Ripley about when they are on the stand.

The ACTING CHAIRMAN. The officials of the Navy Department have. to me, expressed themselves as very much pleased with what has been done there. There is no question about that, so that doesn't enter into the question.

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