contractors where there was a cent different between their two bids, said that he gave that material at cost; but there is no testimony that Mr. Rohleder gave 10 percent on everything that he had, any more than anybody else.

Mr. FLAHERTY. That wasn't the testimony.

Mr. TOLAND. Will you let me read what was responsible for the lieutenant signing and approving that?

The ACTING CHAIRMAN. Mr. Toland, will you let me ask a question and then you can proceed? On this fixed fee-is that the competitive. feature of these contracts? In other words, without regard to the cost, which might in the ultimate be more or less, do these contractors in the submission of their bids state a fee for which they would perform the work or is it on a percentage basis of their estimates?

Lieutenant BISHOP. Yes, sir; they do.

The ACTING CHAIRMAN. Their fee is on a percentage basis of the estimates or it is a lump sum?

Lieutenant BISHOP. Their fee is on a percentage basis of the estimation, which is reduced to a lump sum.

The ACTING CHAIRMAN. Suppose the cost would vary either upward or downward?

Lieutenant BISHOP. Their fee would remain exactly the same.

The ACTING CHAIRMAN. Would remain the same. In other words, if they gave you

Lieutenant BISHOP (interposing). After they received the contracts, if they estimated $2,000,000 and it went to eight, their fee would be exactly the same?

Mr. FLAHERTY. That is, if the scope of the work wasn't increased? Lieutenant BISHOP. That is true.

Mr. FLAHERTY. If it was the same work as specified in the contract. Lieutenant BISHOP. Same work as specified.

The ACTING CHAIRMAN. And if the cost went downward they would get the same fee anyhow?

Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. Now, Lieutenant, the fact of the matter is that without regard to what is a better contract or what isn't you went to Cramp, and Rohleder was working?

Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. Isn't that right?
Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. You inquired as to the contract; is that right?

Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. And subsequently a summary sheet was submitted to you?

Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. Setting forth that there had been three bids. Now, what job had Rohleder been working on?

Lieutenant BISHOP. The four-story office building, and I think part of the nine-story building.

Mr. TOLAND. He was not working on all of these three contracts at the time that you raised this question, was he?

Lieutenant BISHOP. No, sir.

Mr. TOLAND. Based upon the fact that a summary sheet had been submitted to you showing that Charles F. Rohleder was bidder A,

and that bidder B was the United Engineers & Contractors, and that Townsend, Schroeder & Wood, Inc., was bidder C, that the first bid on purchase order No. 5, which was the first contract that Mr. Rohleder received, Rohleder's fee was $2,200, the alleged bid of the United Engineers & Contractors is stated as 4 percent of the estimated cost, and the bid of Townsend, Schoeder & Wood, Inc., was 4 percent of the estimated cost. On purchase order No. 6 the fee of Rohleder was $1,956. The bid of United Engineers & Contractors is alleged to be 4 percent of the estimated cost, and the bid of Townsend, Schroeder & Wood, Inc., was stated to be 4 percent of the estimated cost; and on purchase order No. 12, in the amount of $140,807, the bid of Rohleder was $5,416, the bid of United Engineers is stated as 4 percent of the estimated cost, and Townsend, Schroeder & Wood, 4 percent of the estimated cost. Included in the summary sheet was the recommendation that the contract be awarded to bidder A, contract awarded upon approval of the supervisor of shipbuilding-refer to letter of November 4-while the other contractors were willing to accept such work for a fixed fee of 4 percent of the estimate; bidder B would only accept a larger amount of work and would also require the payment of additional overhead. I would like to read for the benefit of the committee communications from both bidder B and bidder C.

The ACTING CHAIRMAN. Put it in evidence first, Mr. Toland.
Mr. TOLAND. I offer them in evidence.

(A communication dated March 24, 1942, from United Engineers & Constructors, Inc., addressed to the Naval Affairs Investigating Committee was received in evidence and marked "Exhibit No. 275.")

(A communication dated March 24, 1942, from Townsend, Schroeder & Wood, Inc., addressed to the Naval Affairs Investigating Committee was received in evidence and marked "Exhibit No. 276.")

Mr. TOLAND. When was the first time, Lieutenant, that you knew that there was no bid ever filed on behalf of bidder B and bidder C? Lieutenant BISHOP. When I was called to Washington some 3 months ago.

Mr. TOLAND. You never knew it until I told you?

Lieutenant BISHOP. No, sir.

Mr. TOLAND. So that you couldn't do anything about it? You believed that they were bona fide bids when you approved them, didn't you?

Lieutenant BISHOP. Yes, sir.
Mr. TOLAND (reading):

UNITED ENGINEERS & CONSTRUCTORS, INC.,

March 24, 1942.

NAVAL AFFAIRS INVESTIGATING COMMITTEE,

House of Representatives, Washington, D. C.

(Attention Mr. Edmund Toland, general counsel.)

GENTLEMEN: Pursuant to an inquiry of Mr. Vincent A. Burns, attorney for the above committee, I wish to state that United Engineers & Constructors, Inc., has no record of having submitted a bid for

Reconditioning four-story office building; repairs to nine-story building; replacing roof of fabricating shop (covered by purchase order No. 5); reconditioning mold loft floor (covered by purchase order No. 6); reconditioning nine-story building (covered by purchase order No. 12); all of the Cramp Shipbuilding Co.

United Engineers & Constructors, Inc., as a general rule does not bid on such work and would have refused to submit a bid had it been requested to do so. UNITED ENGINEERS & CONSTRUCTORS, INC., CARL SCHUBERT, Treasurer.

The next exhibit, No. 276, is as follows:

MARCH 24, 1942.

NAVAL AFFAIRS INVESTIGATING COMMITTEE,

House of Representatives, Washington, D. C.

(Attention Mr. Edmund Toland, general counsel.)

GENTLEMEN: In reply to the request of Mr. Vincent A. Burns, attorney for your committee, we wish to state that we did not submit bids on the following work of the Cramp Shipbuilding Co.

Reconditioning four-story office building; repairs to nine-story building; replacing roof of fabricating shop (covered by purchase order No. 5); reconditioning mold loft floor (covered by purchase order No. 6); reconditioning nine-story building (covered by purchase order No. 12).

The first bid submitted by us for work at Cramp's Shipyard was for the repairs and alterations to Buildings Nos. 6, 3, 7, 17, 18, 19, 54, 20, 27, 38, 39, and 44.

TOWNSEND, SCHROEDER & WOOD, INC.,
SEATON SCHROEDER, Vice President.

Now, Lieutenant, how long were you there?
Lieutenant BISHOP. About 3 months.

Mr. TOLAND. Three months. How long have you been in the Navy, Lieutenant?

Lieutenant BISHOP. Nineteen months.

Mr. TOLAND. Nineteen months. You are now connected with what yard?

Lieutenant BISHOP. New York Shipbuilding.

Mr. TOLAND. New York Shipbuilding Co. Will you tell, for the benefit of the committee, in your opinion as an engineer whether the work that was done during the time that you were there was good, competent work, commensurate with the compensation that the contractor received?

Lieutenant BISHOP. Well, the work was done fast, but it was done sloppy. I had no inspectors there at the time, for the simple reason that we were initiating a large program at New York Shipbuilding, and the work of reconditioning is work that is difficult to get an inspector for at any time, and it was very difficult to get an inspector for at that time. I think I had two inspectors up until the 1st of January, and some four after that time; and I kept them at the New York Shipbuilding, with the exception of the electrical inspector who went over on part of the lay-out work of the electrical equipment.

Mr. TOLAND. Based upon your experience, Lieutenant, as an engineer and a representative of the Navy Department, is it possible to construct ships and to recondition buildings or to build office buildings and obtain fair, honest, competitive bids?

Lieutenant BISHOP. I don't know about building ships, but I know you can very readily get fair and honest competitive bids in reconditioning and construction of any construction work today up to and including right now.

Mr. TOLAND. Based upon your experience at the ship company that you are now connected with, are competitive bids obtained there that are honest and fair?

Lieutenant BISHOP. Yes, sir.

Mr. TOLAND. Now, while you were there did you have any opportunity to pass upon the plans and specifications of Miller and Sinclair? Lieutenant BISHOP. I did.

Mr. TOLAND. What was your general feeling as to the competency and the quality of the plans and specifications of Messrs. Miller and Sinclair?

Lieutenant BISHOP. I didn't approve any of them.

Mr. TOLAND. You did not approve any of them? While you were at Cramp Shipyard did the commander that sits on your left ever intercede with you or discuss with you the advisability of giving contracts to any one person?

Lieutenant BISHOP. I don't remember.

Mr. TOLAND. Did he ever come to you and discuss with you any contracts for Mr. Rohleder?

Lieutenant BISHOP. Well, he discussed at one time a set-up of making Rohleder the prime cost-plus-a-fixed-fee contractor at the yard-at the Cramp Shipbuilding Corporation.

The ACTING CHAIRMAN. Lieutenant, where are you stationed now? Lieutenant BISHOP. The New York Shipbuilding Corporation, under the supervisor of ships, New York Shipbuilding Co.

The ACTING CHAIRMAN. You still have some supervision over the work at Cramp?

Lieutenant BISHOP. I don't have now. I haven't had, sir, since the supervisor of shipbuilding was designated for Cramp, at the Cramp Shipbuilding Co.

The ACTING CHAIRMAN. How long a period did your duties connect you with the rehabilitation work at Cramp?

Lieutenant BISHOP. Whenever Cramp started in October sometime until, I would say, somewhere near the 1st of February, or perhaps a little earlier in 1941 than that. I believe, although there is no record, Lieutenant Davidson reported to me for training with the understanding that he would go and take charge of the Cramp Shipbuilding Corporation; and I think he reported there some few days before the actual appointment of the supervisor of shipbuilding at Cramp, but I am not sure of the dates.

The ACTING CHAIRMAN. Then your observations and your connection with the rehabilitation program were between October 1940 and sometime up to, but not later than, February 1, 1941?

Lieutenant BISHOP. Yes, sir.

Mr. BATES. What is the general reputation as to this concern? What have you been able to find out about the character of the work that they did?

Lieutenant BISHOP. Well, to tell you the truth, I have been so busy at the New York Shipbuilding Corporation that I haven't, since I left Cramp, paid any attention to it.

Mr. BATES. No; I mean what did you find out while you were with Cramp and assigned those responsibilities? Did you find it an efficient concern and organization, considering, of course, the character of the help available?

Lieutenant BISHOP. I understand the Rohleder concern was a small but active concern, and sometimes it is a benefit to have a small but active concern in that type of work, because they will take a more active interest in a large job.

Mr. BATES. And did this contract call for the expansion of the floor space at all, or just reconditioning of the whole space!

Lieutenant BISHOP. Reconditioning of the building.

Mr. BATES. No expansion or extensions of the building or lifting of the roof at all?

Lieutenant BISHOP. Not at that time, at least.

Mr. MAAS. Were any of these contracts or purchase orders that Rohleder got in themselves very large? They weren't large that you know of, were they?

The ACTING CHAIRMAN. This particular one that we have been discussing?

Mr. TOLAND. These three were a quarter of a million dollars. Rohleder got about two and a half million dollars worth of contracts. Mr. MAAS. Over what period of time?

Mr. TOLAND. Oh, in a period-he has finished the work. He started there in October.

Mr. MAAS. What October?

Mr. TOLAND. October 1940, and the contracts were all completed. Here is one that he got that I would like to show the lieutenant. Mr. BATES. Let me finish, Mr. Maas, will you.

Were you there when this job was completed, this so-called quarterof-a-million job for the reconditioning of these buildings?

Lieutenant BISHOP. No, sir; it was barely started when I left there. Mr. BATES. I see. You were relieved by another naval inspector? Lieutenant BISHOP. Yes, sir.

Mr. BATES. Have you any idea as to whether or not they exceeded the estimate?

Lieutenant BISHOP. I don't.

Mr. BATES. I see. All right.

Mr. FLAHERTY. Following up that line of questioning, Lieutenant, you state that this had hardly started when you were relieved there. From the statement that you made a few minutes ago, isn't it a fact that you considered the work rather sloppy? You didn't have much time to get any idea of how this contractor performed, did you?

Lieutenant BISHOP. Well, you don't have to have much finished work to tell whether it is sloppy or not. You only have to look at one ceiling to see whether the tile ceilings are tacked on properly or not. Mr. FLAHERTY. Has the Navy Department inspected the completed job?

Lieutenant BISHOP. I imagine that that work has been gone over. Mr. FLAHERTY. Has it been accepted?

Lieutenant BISHOP. And put in proper condition before acceptance. Mr. FLAHERTY. Well, you stated it was a small firm that has taken on a large job. Would you consider that sloppy way-the so-called sloppy way-they went about it might be attributed to the fact that they were breaking in on a large job and that in the course of time they would be experienced enough to handle it efficiently?

Lieutenant BISHOP. Yes, sir; not only that, but there is one thing that has to be considered that there was a certain amount of speediness. I don't feel that in order to have a job speedily done, it has to be done sloppy, but there is a tendency, a trend in that direction.

Mr. BATES. It would also depend upon the availability of competent mechanics as to the kind of job you eventually were going to get. You might get a few wood choppers eligible to throw up a ceiling or a solid wall, for that matter, but it all depends on the experience they have had; and down through the last 2 or 3 years your particular department has been absorbing a good many building-trade operators. They have been hard to get. It isn't so easy to do a good job on recon