I discussed this with Admiral Robinson and with Commander Lemmler's Assistant in his absence. He introduced me over the phone to Mr. O'Hara (telephone District 4911, extension 3341) in the Defense Plant Organization at the R. F. C. He stated that the project would come to them from the Navy Department with the recommendation (see enclosure herewith and Commander Weyerbacher's memorandum) and they would draft up an agreement which they would discuss with us and after their Board had tentatively agreed to these terms "subject to the approval of the Navy Department." When all three parties had agreed, then the Document would be executed by all and they would forward it to the Philadelphia Reserve Bank and authorize a commitment to cover the cost of the Facilities in question.

The Agreement is in effect a "lease agreement" under which they would build and lease to us. Actually, a contract for the Engineering and Construction would probably be let to us subject to their approval. They would then have a "representative" on the job, but it is possible they would wish to utilize the Navy Cost Inspection and Supervisor of Shipbuilding organization at our yard to tie in on the approval of the Engineering, as well as the Cost Accounting (this to avoid duplication of Governmental representatives at the Cramp plant). He stated that the activites of the Naval, Civil Engineering, and Cost Inspectors thus would largely be of a "rubber stamp" capacity. In other words, great responsibility would be placed upon us and upon the engineering firm selected to handle the job.

Mr. O'Hara stated that our owning the property presents a serious problem under the present method which they use for handling this type of Governmental expenditure. He felt that they must acquire title or "lease hold” interest in the property required for the Repair Facilities and that it might be that it would be worked out so that they would give us an option to buy back at cost, less deductions to be set forth in the Lease Agreement. They have a gentlemen's (?) Agreement with the Navy, allowing them to take over, and so forth, known as a "take-out letter."

Credit provided us at the Federal Reserve Bank would be drawn against for the Engineering and Construction work as it progressed, upon certification to the Bank by the Defense Bank representative, supported by our cost data and possibly the okay of the Supervisor of Shipbuilding and local Cost Inspector. (Details to be worked out.)

Mr. O'Hara frankly expressed that they had not gone far enough ahead so that a complete procedure had been worked out covering all conditions but they would like to have me telephone him Friday to arrange a meeting for Wednesday of next week, when Mr. Ripley and Mr. Reath could be present for thorough discussion of the whole subject.

I pointed out both to Com. Lemmler's asst. and Mr. O'Hara that anything we did at this time to cover the $3,485,240 Repair Facilities Project should be along the lines of tying it in with the Drydock construction, because otherwise it would result in delay, and save hundreds of thousands of dollars extra cost, since these two jobs should be carried forward as one contract.

As a result of visit to Bureau of Ships, Washington, on Saturday, August 23rd, at which time I saw Commander Rawlings, Commander Lemmler, and Lt. Bearce, the following information relative to the above subject was obtained.

The bill containing money to cover additional repair facilities had not been signed by the President, the reason being that included in this bill is the highly controversial $35,000,000 new office building for the War Department, which the President opposes. I understand that some sort of joint resolution by Congress is under way to permit discretion as regards this Office building instead of the mandatory requirements in the bills passed.

The Bureau of Ships had prepared a draft of a "letter of intent" covering our facilities and I obtained a copy from Comm. Rawlings, copy attached hereto. This "letter of intent" is in general in accordance with the agreement previously reached on August 19, 1941, when Weyerbacher attended a conference in the Bureau of Ships. Comm. Rawlings expected that the "letter of intent" would be signed within a day or so. In any case, we will have a "letter of intent" before we have any proposed contract sent us.

I asked particularly as regards the method that we could follow in selecting an Engineering Firm to prepare plans and specifications and was told that some sort of competition was necessary. I gathered that the competition could be simple inquiries on the part of Cramp Shipbuilding from various firms and a definite statement from us that after we had surveyed the situation, we felt that the firm of. was the best qualified to undertake the work and we recommend that we be authorized to place a contract with this selected firm to cover the Engineering work.

I stated that we were leaning toward the firm of F. R. Harris in New York and understood that if we recommended this firm and the Supervisor of Ships here approved, the Bureau of Ships will have no objection.

Comm. Lemmler pointed out that the Crandall Engineering Co., were able to prepare plans for drydocks and that as far as he knew, the firms of Harris and Crandall were the best for drydock Engineering plans. He suggested that we obtain information from Crandall, for comparison with whatever we get from Harris.

In view of the status of this question, I see no reason why we should not go right ahead contacting Harris and Crandall or anybody else capable of doing the work, obtaining the necessary information on which we can act when we get the formal "letter of intent." Of course, until we have that, we can make no definite commitments.

I was shown copies of a contract recently placed with the Alabama Drydocks which was a combined engineering and construction contract, they having selected one firm to do the whole job. Our proposed procedure of selecting an engineering firm, who after having prepared plans and specifications, would obtain bids, as a result of which recommendations for a construction award would follow is satisfactory to BuShips.

The Bureau stated that the contract sent us would be on a "true cost" basis, without profit to us and that any contracts we placed thereunder should be on a fixed price basis with fixed fee; the amount of the fee being kept in the Neighborhood of 5% of the amount of the contract. (Alabama Drydock contract above referred to was for $2,500,000 with an Engineering Fee of $45,000 and a construction fee of $65,000.)

WGD/fr.

c. c. Mr. J. P. Ripley. Comm. Weyerbacher, Mr. T. Reath.

W. G. DuBose.

EXHIBIT 306

Personal

FREDERICK R. HARRIS. INC..

27 William Street, New York, N. Y., August 28, 1941.

Rear Admiral WILLIAM G. DUBOSE, U. S. N. RET.,

President, Cramp Shipbuilding Company,

Richmond and Norris Streets, Philadelphia, Pennsylvania.

MY DEAR WILL: Mr. Ripley, your new Chairman of the Board, was in to see me this morning, as I understand it, at your suggestion in regard to the prospective cost of the improvements to be financed by the Navy.

I have just been down to Washington in connection with the work at Brooklyn and have surprised them a little bit with some of the figures I have pre

sented on what they have to spend to carry into effect what they want to accomplish. The trouble is, as you well know, that in the first blush everyone thinks they can get along with very little and that the work can be done quite inexpensively.

I don't blame your Mr. Ripley for wanting to have as much background as possible before embarking on this undertaking. I told him we would be very glad to make up an estimate as best we could and we will mail it to you by the end of next week.

I had intended writing you a note of congratulation on your assuming the Presidency of the corporation. I should think it would be much more satisfactory from your standpoint than your former job as Chairman of the Board, as you will certainly be much more in the operating saddle. It is a good thing for both of us to be busy.

With very best regards from the family and myself.
Sincerely yours,

ALP: V.

[s] A. L. PARSONS.

EXHIBIT 307

INTERDEPARTMENTAL

NEW YORK, August 29, 1941.

From: J. P. Ripley.
To: Wm. G. DuBose.
Subject: Repair Base.

I want to confirm, for the files, what I said to you over the telephone yesterday; namely, that I had a very pleasant visit with Admiral Parsons, Mr. Knox, and another man whose name I did not get, all three being identified with the engineering firm of Frederick C. Harris & Co.

At this meeting, I gathered the following:

(1) F. C. Harris & Co. are nothing but consulting engineers.

(2) Admiral Parsons thinks it is impossible to get a lump sum bid for the repair base job unles all the engineering were done in advance, which would take literally months. In other words, he said that engineering and designing go along concurrently with construction, and that it would be impracticable to approach the problem from the standpoint of getting one lump sum bid for the whole job.

(3) They would be delighted to do the engineering on some appropriate basis of compensation.

(4) They mentioned the possibility of a graving dock, and I told them that so far as we are concerned they can forget it, because Admiral Robinson has told me that I should approach the problem from the standpoint of a floating dock.

(5) They will be glad during the next week, at no expense to us, to prepare their estimates of the cost of building the repair base, using a floating drydock. J. P. R. JPR: W

EXHIBIT 308

INTEROFFICE CORRESPONDENCE

CRAMP SHIPBUILDING COMPANY

DECEMBER 2, 1940.

From: J. P. Ripley.

To: W. G. DuBose, James Reed,

Thinking it possible that somebody in the Navy may raise the question with you before I see you, I am writing the following.

The question has already been raised with me by the Navy as to the other half of our yard. I have said that I think the back of our management might be broken if the Navy right now gave us a contract for some other variety of ship; I mean other than the cruiser for which we already have a contract;

but I have said that I would think the Navy could give us another EPF contract to rebuild the other half of the yard. It seems to me we could do that job without imposing too big a load on you men; and then at a later date the Navy could give us either a contract for more of the same type cruiser or, if we have progressed far enough with our organization problems, a contract for some other kind of ship-but preferably for the cruisers.

From the standpoint of national defense, leaving Cramp entirely out of consideration, it does seem to me that the other half of our yard should be rebuilt, with construction starting at an early date, so that it will be available if the emergency becomes more critical.

If you men agree in general with the foregoing, I would suggest you say so if asked. If you do not agree with me, I hope you will give me a memorandum telling me what you think our position should be, if asked by the Navy, as I think we will be very shortly.

JPR: W.

J. P. RIPLEY.

EXHIBIT NO. 309

[ Office copy]

AUGUST 29, 1940.

Personal.

Rear Admiral W. G. DUBOSE, U. S. N.

National Defense Council, Federal Reserve Building,

Washington, D. C.

DEAR BILL: While attending the night launching at the Moore Shipyards last night, Hank Gleason told me, with a great deal of assurance as to its reliability, that Vickory was going on the retired list and be appointed to the Maritime Commission vice Wiley, and that you were going over there to work with Jerry Land.

Without disclosing any of my reasons for believing to the contrary, I mildly questioned the accuracy of his information which, he said, came directly from Crisp, the new manager at Mare Island who succeeded Ikie Yates there. In view of our discussions during my recent flying trip to Washington and subsequent understandings, I would like to be in a position to confound our positive friend Hank, if you will please give me the low-down on this whole situation. As you know, the Cramp proposition is awaiting the action of the Pennsylvania Supreme Court which, it is hoped, will be taken some time next week. Meantime, best personal regards.

Sincerely yours.

JR: jm

DEAR JERRY: Very confidentially, what the hell? Please note the enclosed clipping from the Daily Commercial News of San Francisco today, and also I suggest you have your Publicity Department show you the clipping which they probably have from the Chicago Journal of Commerce of August 21 along these same lines. I am unable to advise as to how this publicity got under way.

EXHIBIT No. 312

THE ADVISORY COMMISSION TO THE COUNCIL OF NATIONAL DEFENSE,
Washington, D. C., December 28, 1940.

Memorandum.

To: Admiral Wm. G. DuBose, Cramp Shipbuilding Company, Philadelphia, Pennsylvania.

From: Captain J. O. Gawne, U. S. N., Bureau of Ships, Navy Department, Washington, D. C.

In reply to your memorandum of December 20, I am enclosing herewith a list of the shipyards with the amounts of the facilities required for the 70% increase of the Navy Building Program.

70533-42-vol. 3-30

You will note that these amounts in some cases are larger than cleared originally.

With kind regards.

Very sincerely yours,

Letter goes out asking for quotation (would be received by vendor next day). Answer comes in giving quotation and is promptly marked "received too late" by purchasing division.

Quotations received from one Company and giving price.

Quotations received from another Company and giving a higher price-next day another letter comes in from these people saying "in line with telephone conversation we quote This second quotation is usually at a lower

price.

Note: This second quotation in many cases does not get back to the files. What happens to 2 quotes from same firm? Is first quote destroyed? If so, by whom? (Get examples.)

The memorandum of which this is a photostat was typed by me for Mr. James Reed. The penciled notation on the bottom I recognize as being in Mr. Reed's handwriting.

FRANK J. REISER.

I recognize the penciled notation on the memorandum of which this is a photostat as being in the handwriting of Mr. James Reed.

11-19-41.

MADELEINE J. MALONE

Witness: Vincent A. Burns as to Miss Malone & Mr. Reiser.

MEMORANDUM

Concerning a memorandum of June 4, 1941, with a pencil notation at the bottom which has been identified by Frank Reiser and Miss Malone as being the handwriting of James Reed, Reiser informed me that Mr. Reed was disturbed about the method of handling bids and quotations in the Purchasing Division. Mr. Reed asked Reiser to keep his eyes and ears open in an effort to learn the cause of apparent irregularities. Reiser further informed me that as a result of a conversation with Mrs. O'Brien, he made the attached memorandum and submitted it to Mr. Reed.