Mr. ROHLEDER. That is right, I know, but the whole scope of the thing has been changed entirely.

Mr. TOLAND. How?

Mr. ROHLEDER. Why, it is larger.

Mr. TOLAND. I mean but based on just exactly what you estimated. Mr. ROHLEDER. The other, you know-the commercial yard was based on just, you might say, an assembly shop.

Mr. TOLAND. No; I am talking about the office buildings.

Mr. ROHLEDER. Óh, well, the office building

Mr. TOLAND (interposing). Except the shipways. How do you justify the increased cost as against your original estimate? Mr. ROHLEDER. It is just an increase in scope of work, sir.

Mr. TOLAND. Didn't you estimate in 1939, so far as the office buildings were concerned, just exactly what you did in 1940?

Mr. ROHLEDER. Oh, not by a long shot.

Mr. TOLAND. How much difference is there in your original estimate for the reconditioning of the office buildings as against what you actually did?

Mr. ROHLEDER. Oh, I imagine it is enormous. I don't remember what the first estimate was.

Mr. TOLAND. You have the estimates here, haven't you?

Mr. ROHLEDER. Not the original estimates.

Mr. TOLAND. I gave you your folder, didn't I, that you made in 1939?

Mr. ROHLEDER. I know.

Mr. TOLAND. Let's get back to the lump-sum contract that I asked you about. What was your profit on that?

Mr. ROHLEDER. I think it was about 3 percent.
Mr. TOLAND. Let me show you the figures.
Mr. ROHLEDER. I have a copy of that here.
Mr. TOLAND. That we took from your files.
Mr. ROHLEDER. That is not complete.
Mr. TOLAND. That isn't complete?

Mr. ROHLEDER. No, sir.

Mr. TOLAND. Isn't it a fact that on your lump-sum contracts, you used people that were charged against the cost-plus-a-fixed-fee contracts?

Mr. ROHLEDER. Absolutely not, sir.

Mr. TOLAND. You never did that?

Mr. ROHLEDER. Not one nickel's worth.

Mr. TOLAND. All right, what does this mean? [Handing paper to the witness.] Is that your handrwiting?

Mr. ROHLEDER. That is not my handwriting.

Mr. TOLAND. Do you subscribe to what is in there?

Mr. ROHLEDER. "4 story bldg Fab. shop. Labor runs over allowance." Mr. TOLAND. Do you subscribe to that?

Mr. ROHLEDER. This is all fee work.

Mr. TOLAND. But do you subscribe to that? Was that your policy under these contracts?

Mr. ROHLEDER. That is evidently instructions we got from the Cramp Shipbuilding auditing department.

Mr. TOLAND. Do you know whose handwriting that is?
Mr. ROHLEDER. I do not, sir.

Mr. TOLAND. Let me see it.

Mr. COLE. May I ask about these so-called lump-sum contracts? What was the method of making the award of them?

Mr. ROHLEDER. They were bid, sir, in competition.

Mr. COLE. Competitive awards?

Mr. ROHLEDER. Yes, sir

Mr. COLE. Not negotiated?

Mr. ROHLEDER. "No, sir. The fee work was all negotiated.

Mr. COLE. But they also had another type of negotiated on lump sum. Mr. ROHLEDER. Yes.

Mr. COLE. But this was not a negotiated lump sum?

Mr. ROHLEDER. It was not.

Mr. COLE. It was competitive?

Mr. ROHLEDER. It should have been.

Mr. COLE. It should have been? You ought to know whether it

was or not.

Mr. ROHLEDER. NO.

Mr. TOLAND. Didn't you divide your labor cost between one job and the other?

Mr. ROHLEDER. No, sir.

Mr. TOLAND. You know Baldridge's handwriting, don't you?

Mr. ROHLEDER. Yes, sir.

Mr. TOLAND Isn't that his handwriting?

Mr. ROHLEDER. No; not to my knowledge.
Mr. TOLAND. It is not?

Mr. ROHLEDER. No, sir.
Mr. TOLAND. Mr. Ward's?

Mr. ROHLEDER. No, sir.

Mr. TOLAND. This was taken from his files.

Mr. ROHLEDER. Well, it might be.

Mr. TOLAND. Do you recognize that writing?

Mr. ROHLEDER. No, sir; I don't recognize that writing.

Mr. TOLAND. Mr. Chairman, I would like to offer it in evidence.

This was found in the files in Mr. Rohleder's office. It says:

4 story bldg Fab. shop. Labor runs over allowance. Do not charge labor to these items anymore. Divide between mold loft floor & 9 story bldg.

(The memorandum was received in evidence and marked "Exhibit No. 288.")

Mr. TOLAND. Wasn't it your practice to divide the cost where it ran over on one contract and apply it against another?

Mr. ROHLEDER. No; but I presume that might have come from Cramp Shipbuilding accounting department-that information. Mr. TOLAND. You were also very much interested in the fire-damage contract, weren't you?

Mr. ROHLEDER. Yes, sir.

Mr. TOLAND. You got that, didn't you?

Mr. ROHLEDER. Yes, sir.

Mr. TOLAND. You knew what the bids were on that before you submitted a bid yourself?

Mr. ROHLEDER. I did not, sir.

Mr. TOLAND. You did not?

Mr. ROHLEDER. No, sir.

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Mr. TOLAND. There was a great deal of effort on the part of your friends to persuade the Navy Department not to ask for competitive bids in that case, wasn't there?

Mr. ROHLEDER. That is one job that should never have gone out on competitive bids.

Mr. TOLAND. Answer my question either yes or no when I ask it, please. I am trying to be fair with you, to get the facts.

Mr. ROHLEDER. I want to be fair, too.

Mr. TOLAND. If you want to be funny, I will be glad

Mr. ROHLEDER (interposing). It is not my intention to be funny. I want to be honest in this whole thing.

The ACTING CHAIRMAN. Mr. Rohleder, if you can, answer Mr. Toland's direct questions, then if you wish to make an explanation, you will have an opportunity to do it to the fullest extent.

Mr. TOLAND. But it is a fact, isn't it, that Weyerbacher and that you did everything to persuade these naval officers not to give people an opportunity to bid on that contract?

Mr. ROHLEDER. No, sir.

Mr. TOLAND. Isn't it a fact that because you had something to do with the settlement with the insurance company, you thought you should get it?

Mr. ROHLEDER. I was promised a contract.

Mr. TOLAND. Who promised?

Mr. ROHLEDER. Commander Weyerbacher and Mr. Rust.

Mr. TOLAND. They promised you a lot of things, didn't they?

Mr. ROHLEDER. They did in this case.

Mr. TOLAND. Yes; and they did in other cases, didn't they?
Mr. ROHLEDER. Not that I know of.

Mr. TOLAND. They promised you the contracts you got in October. You got them, didn't you?

Mr. ROHLEDER. I know, but I really earned those, too.

Mr. TOLAND. What did you do to earn them before October 1940? Mr. ROHLEDER. I was making all these estimates.

Mr. TOLAND. Back in 1939 ?

Mr. ROHLEDER. That had nothing to do with it.

Mr. TOLAND. What estimates did you make before October 29? Mr. ROHLEDER. Well, we had to go through the whole thing again and make up another estimate.

Mr. TOLAND. How long did that take?

Mr. ROHLEDER. I imagine a couple of weeks.

Mr. TOLAND. You were there a couple of weeks before October 29? Mr. ROHLEDER. That is right. After we had our estimates made up, we had to sit down and adjust it with Mr. Rust's estimate. Mr. TOLAND. And based upon the fact that you did that, you felt you were entitled to the contracts in violation of the law. right?

Is that

Mr. ROHLEDER. There was no one trying to violate the law. Mr. TOLAND. The fact of the matter is that there were no bids submitted or no opportunity afforded to anybody else to get these con

tracts.

Mr. ROHLEDER. I had nothing to do with that.

Mr. TOLAND. You are perfectly satisfied with that position?
Mr. ROHLEDER. I had nothing to do with it. That is Cramp's.

Mr. TOLAND. Mr. Chairman, I would like to read in the record a photostatic copy of a letter, dated October 11, 1941, from Captain Hanson to the Bureau of Ships. I offer it in evidence first.

(Photostatic copy of the letter dated October 11, 1941, was received in evidence and marked "Exhibit No. 289.")

Mr. TOLAND. It says (par. 1):

1. The enclosures are furnished for the Department's information supplementing references (a) and (b).

2. There is, of course, no warranty for Mr. Rohleder's purported statement to Mr. Anderson as to the motive of the Navy Department's representatives at the Cramp Shipbuilding Co.'s plant, in insisting upon competitive bids.

3. It appears from the enclosures that the two ostensibly competing bids presented to this office by the Cramp Shipbuilding Co. along with the low bid of C. F. Rohleder, for repairs to fire damage to the I. P. Morris Building were both from contractors indicated by enclosure (A) to be under Mr. Rohleder's control; that these were "complimentary" bids; and that they therefore had no real value nor significance for purposes of competition. The award of subcontract for this job was recommended by the Cramp Shipbuilding Co. to the low bidder, and was approved by this office on that basis.

4. It is of interest in the light of subsequent developments that considerable pressure of persuasion had previously been brought to bear upon this office by an executive and employees of the Cramp Shipbuilding Co. (the latter doubtless under instruction) to award the order to C. F. Rohleder without competition, a final inducement being offered to the effect that Mr. Rohleder would take the work on a cost basis without fee. This last point is confirmed by the statement attributed to Mr. Rohleder in enclosure (B) herewith. It had the effect of making this office more suspicious as to the bona fides of the individuals who contributed to the argument in favor of award to C. F. Rohleder without competition. Signed by Captain Hanson.

You knew these different contracts were going to come up from time to time after you got in there without any basis of competition from the beginning, and you went to Mr. Weyerbacher, didn't you? You talked with Mr. Weyerbacher, didn't you, on many occasions?

Mr. ROHLEDER. I worked with him every day. We were together four or five times, possibly, discussing the different phases.

Mr. TOLAND. Whom do you blame for all the irregular, phony, and forged bids that were submitted to you and to that company?

Mr. ROHLEDER. I don't know, sir. My contracts were directly with the Cramp Shipbuilding Co. and directly under

Mr. TOLAND (interposing). But all of these bids that we have submitted in the record, for the most part were bids submitted to you? Mr. ROHLEDER. That is right.

Mr. TOLAND. Are you accepting the responsibility for the fact that the Government did not get the fair competition from bidders that it was entitled to get?

Mr. ROHLEDER. I don't understand you.

Mr. TOLAND. Are you accepting the responsibility for the fact that there was not, in many instances, compliance with the law and that the bids submitted were not honest, valid, competitive bids?

Mr. ROHLEDER. We took all those bids in good faith.

Mr. TOLAND. Answer the question yes or no.

The ACTING CHAIRMAN. He is asking you if you are accepting responsibility.

Mr. TOLAND. Or do you think the responsibility belongs in Commander Weyerbacher or someone else?

Mr. ROHLEDER. Well, I don't know just exactly how to answer that "yes" or "no."

Mr. TOLAND. Would you rather not answer it?

Mr. ROHLEDER. No. I worked with them in direct accordance with my contract, sir; directly under their inspection, authority, approval. We did everything they wanted done. I had no authority to make a purchase over $100 without first taking it up and having it approved. Mr. TOLAND. And that required bids, too?

Mr. ROHLEDER. All our prices, before they were submitted to Cramp Shipbuilding Co., were checked by us.

Mr. TOLAND. Isn't it a fact that your office used to call up people on the phone and then later get complementary bids?

Mr. ROHLEDER. No, sir.

Mr. TOLAND. That isn't a fact?

Mr. ROHLEDER. No, sir; it is not, sir. We called up for bids, yes. Mr. TOLAND. Isn't it a fact that bids were opened not in the presence of the Supervisor of Ships or responsible officers of the company? Mr. ROHLEDER. You mean these sub-bids?

Mr. TOLAND. Yes.

Mr. ROHLEDER. Oh, yes, sir.

Mr. TOLAND. Isn't it a fact that a lot of the bids were never mailed or that they were all flat? Did you ever notice that?

Mr. ROHLEDER. Mr. Burns called my attention to that.

Mr. TOLAND. You never noticed that?

Mr. ROHLEDER. I never noticed it because they never came to my desk. They were opened outside.

Mr. TOLAND. You had responsible people there, didn't you? Mr. ROHLEDER. Absolutely, sir. Each man had at least two jobs to do.

Mr. TOLAND. Do you think that what you did in getting these contracts was perfectly proper?

Mr. ROHLEDER. I think so; yes, sir.

Mr. TOLAND. Wasn't there an understanding between you and Weyerbacher that he was going to take care of you?

Mr. ROHLEDER. No, sir; absolutely not.

Mr. TOLAND. Why did he give you the contracts?

Mr. ROHLEDER. Because I was giving him good service.

Mr. TOLAND. Giving him good service?

Mr. ROHLEDER. Absolutely.

Mr. TOLAND. What service were you giving him?

Mr. ROHLEDER. Why, I was spending all my time on the job, with a small organization, all of them having two or three jobs to attend to themselves, kept our overhead down to 3 percent. I would say that was good service.

Mr. TOLAND. And because of the fact that you gave Weyerbacher good service, he gave you these contracts without competitive bidding? Mr. ROHLEDER. Certainly, because we were saving the Cramp Shipbuilding Co. money.

Mr. TOLAND. How do you know?

Mr. ROHLEDER. Well, it is evident.

Mr. TOLAND. How do you know that, based upon your experience? How can you state that any other regularly established contractor couldn't do this job quicker, better, and cheaper than you did?