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Mr. JUDD. That is important because some of these other contracts were let after that.

Mr. BROWNSON. I will ask the staff to check carefully, ask questions about these contracts that have been let subsequent to the change, and to report to the subcommittee what results were gained by the checking.

Mr. JUDD. As I recall, the one with the erasure was after that date. What is the date of that?

Miss QUEEN. No; it was before the change.

Mr. Brownson. Do you know personally any of the people from Retort Pharmaceutical Co.?

Miss QUEEN. No one except Mr. Miller, who is here. The only time I met him was when he came up and asked to be placed on the mailing list.

Mr. BROWNSON. Have you seen anyone or discussed with anyone these contracts since July 1 of this year?

Miss QUEEN. No, sir.

Mr. Judd. She said there were a good many other people working on purchases of pharmaceuticals, chemicals, and so forth. How is it determined which of these come into your office and which go to the office of other purchasing agents!

Miss QUEEN. The requisitions come from the FOA to the liaison officer, who is Mr. Ross. It is my impression that for a long time Mr. Ross made the distribution to the groups. I may be wrong. I think now that he sends all the requisitions up to Mr. Dowd, who is chief of the Purchase Division, and Mr. Dowd breaks down the distribution as to which group shall handle what.

Mr. JUDD. You make purchases of pharmaceuticals only for the FOA?

Miss QUEEN. That is right.
Mr. JUDD. That is all.
Mr. BROWNSON. Mrs. St. George.
Mrs. ST. GEORGE. No questions.
Mr. BROWNSON. Mr. Williams.
Mr. WILLIAMS. No questions.
Mr. BROWNSON. We thank the witness very much for her testimony.

In closing this hearing, I would like to remark that I have, in the course of my brief membership on this subcommittee and on the Bonner subcommittee in the previous Congress, had occasion to observe and comment on some faulty governmental procedures involving losses and potential losses to American taxpayers, but I must say I have not seen or expect to see any set of governmental procedures which, for looseness and utter inefficiency and for the dangers of temptation to which they expose Government employees, equal those we have had disclosed today. They constitute a worm's eye view of the bad side of bureaucracy. The subcommittee will stand adjourned.

(Thereupon, at 5 p. m., the hearing was adjourned.)

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Contractor: Retort Pharmaceutical Co., Inc., 42–2.7 9th Street, Long Island

City 1, N. Y. The above-numbered contract is hereby amended to include the following provision in lieu of paragraph 5 : “Assignment of Claims" in Special Program Contract Terms, Revised July 15, 1949.

***Assignment of claims. (a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U. S. Code 203, 41 U. S. Code 15), if this contract provides for payment aggregating $1,000,000 or more, claims for moneys dne or to become due the contractor from the Government under this contract may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any such assignment or reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Notwithstanding any other provision of this contract, payments made after the date of this amendment to an assignee of any moneys due or to become due under this contract shall not, to the extent provided in said Act, as amended, be subject to reduction or set-off.

“(b) In no event shall copies of this contract or of any plans, specifications, or other similar documents relating to work under this contract, if marked Top Secret,' 'Secret,' 'Confidential,' or 'Restricted,' be furnished to any assignee of any claim arising under this contract or to any other person not entitled to receive the same; provided that a copy of any part or all of this contract so marked may be furnished, or any information contained therein may be disclosed, to such assignee upon the prior written authorization of the Contracting Officer."

This amendment is in the best interests of the United States Government and does no affect the unit price quoted. All other conditions, terms, and stipulations will remain in full force and effect.

This amendment has been entered into pursuant to authority of Section 119 and/or 403 of the Foreign Assistance Act of 1948 and Executive Order 9943 of April 9, 1948. Acceptance by the Government :

By (Signed) H. C. Maull, Jr.

H. C. MAULL, Jr. Title : Acting Director, Purchase Division.

Date: December 4, 1951. Acceptance by the Contractor :

RETORT PHARMACEUTICAL Co., Inc.
By (Signed) Miller.
Title: Vice President.

Date : November 30, 1951.
Purchase Branch 2 (DQ) (N) (Code) (S)

Contract No: GS-OOP-16154 (EC)

Reg. No: ECA-95-370-00-H201-2229 (Partial) To: General Services Administration, Emergency Procurement Service, Seventh And D Streets, SW., Washington, D. C.

108

The undersigned offers to furnish, at the prices stated, the following:

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“This contract has been entered into pursuant to the Foreign Assistance Act of 1948 (62 Stat. 137), as amended, and Executive Order No. 9943, dated April 9, 1948."

Point of origin: Contractor's plant, Long Island City, N. Y.
Delivered point: F. A. S. New York.

"The contractor warrants that the prices quoted herein are not in excess of applicable ceiling prices established by the Economic Stabilization Agency or other authorized Government agency and in effect upon the date hereof for the supplies or services to be furnished hereunder."

Contractor represents: That the aggregate number of employees of this bidder and his affiliates is less than 500.

Continuation Sheet No. 2: Special Program Contract Terms (Revised July 15, 1949), General Conditions for Special Program Contracts (Revised November 24, 1950), and Form PO-14, attached hereto, are hereby made a part of this contract.

This contract is in confirmation of commitment letter dated November 15, 1951. Delivery: Item 5—500,000 vials, December 1951 ; balance, January 1952.

Item 12—December 1951. Discount 142 percent 20 calendar days. Retort Pharmaceutical Co., Inc., 42–25 Ninth Street, Long Island City 1, N. Y.

(Name of firm or individual and address) Date: November 23, 1951.

By (Signed) M. MILLER,

Vice President.

(Signature and title) Accepted by the Government: Date: November 27, 1951.

Name (Signed) H. C. Maull, Jr.

H. C. MAULL, Jr.

Title : Acting Director, Purchase Division. Packing: Materials shall be packed suitably for overseas export in accordance with standard commercial export packing practice, subject to inspection and approval of the Emergency Procurement Service. Exterior container shall be a wooden box suitably constructed of seasoned lumber properly nailed and strapped in a ipanner which will insure that packing will resist rough handling and effect safe delivery. Total net weight--- Total gross weight-------- Number of cases_ Cubic measurements--

Area of source: United States.

Markings: See paragraph 9, pages 2 and 3, of attached General Conditions for Special Program Contracts (Revised Number 24, 1950). Detailed marking instructions will be issued when ready for shipment. ECA emblem for Indochina is not required.

Quantities in excess of specified amounts will not be accepted. The Government reserves the right to require contractor to provide samples of materials he proposes to furnish. Such samples may be subject to laboratory test and analysis by the Government prior to shipment.

The contractor warrants and guarantees to the United States as to the date of shipment or other delivery that the article or articles comprising each shipment or other delivery under this contract shall not, as of the date of such shipment or delivery, be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, and shall not be an article which may not under provisions of section 404 or 505 of the Act be introduced into interstate commerce.

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SPECIAL PROGRAM CONTRACT TERMS

Revised, July 15, 1949 1. Federal taxes.—(a) Prices offered herein shall be deemed to include any Federal taxes imposed by Congress which on the date of offer are applicable to articles or services or components thereof, offered. If, (1) after date of offer (A) Congress shall impose any tax, or (B) it shall increase any then existing tax, or (C) Bureau of Internal Revenue shall rule that a tax theretofore imposed is applicable and contractor at time of offering reasonably believed such tax was not applicable, with respect to production, processing, manufacturing, holding, importation, transportation, or sale of any articles or services, or components thereof, covered by offer and (2) contractor is required by operation of law or by specific contractual obligation to pay such tax or bear its burden, then upon written application therefor and proof thereof, contractor's quoted prices of articles or services concerned shall be correspondingly increased. If, by operation of law or otherwise including any action by the Secretary of the Treasury under section 307 (c) of Revenue Act of 1943, contractor is relieved in whole or in part from payment of any tax deemed included in quoted prices, or from bearing its burden, quoted prices shall be correspondingly reduced. Invoices or vouchers covering increase or reduction in price in accordance with this paragraph (a) shall state amount thereof as separate added or deducted item,

(b) As to any Federal tax included in quoted prices or otherwise authorized to be added to those prices in accordance with paragraph (a), contractor waives, releases, and assigns to the United States any and all right, title, and interest in and to any refund of or credit for such tax upon or by reason of exportation of any articles furnished under this contract and agrees to assist the Government, if requested to do so, in obtaining refund, credit or exemption as to such tax.

(c) Since, unless otherwise provided, the articles to be furnished under the contract are to be exported, the quoted prices do not include any amount for transportation tax imposed by section 3475 of the Internal Revenue Code, as amended. If, at any time, Contractor should be required to pay any part of such tax because of the failure of the Government to export the articles after delivery by Contractor, or to furnish Contractor, upon request, with sufficient evidence of exportation of the delivered articles within the time required by the Revenue Laws and Regulations, or for any other reason, the actual amount of such tax paid shall be invoiced as a separate item and paid by the Government as an addition to the quoted prices.

2. Error in extending prices.-In case of error in the extension of prices, the unit price will govern.

3. Payment.—Contractor shall be paid, upon submission of properly certified invoices or vouchers, prices stipulated herein for articles or services accepted, less deductions, if any. Unless otherwise specified, payment may be made on accepted partial deliveries when the amount due thereon equals or exceeds $1,000 or 50 percent of total amount of contract.

4. Discount time.-If discount is offered, time will be computed from date of delivery of articles to carrier when final inspection and acceptance are at point of origin, or from date of delivery at destination or port of embarkation when final inspection and acceptance are at those points or from date correct bill or voucher properly certified by contractor is received, if latter date is later than date of delivery.

5. Assignment of payments. If this contract provides for payment in the aggregate of $1,000 or more, then all moneys due or to become due thereunder may be assigned by contractor to a bank, trust company, or other financing institution, including any Federal lending agency, in accordance with the provisions of the Assignment of Claims Act of 1940 (54 Stat. 1029, 31 U, S. C. 203, 41 U. S. C. 15).

6. Inspection and test.-(a) All material and workmanship shall be subject to inspection and test at all times and places, including, when practicable, during manufacture. If any articles or services are defective, or otherwise not conforming to specifications, Government shall have the right to reject same, or to require correction or replacement or, if public necessity requires acceptance of such articles or services, payment therefor may be made at proper reduction in price. If rejection is made at a point other than contractor's premises, contractor shall promptly, upon request, remove at his expense rejected articles or services, and shall be liable to the Government for any cost of removal, correction, or replacement resulting from failure to do so as required.

(b) If preliminary or final inspection or test is made on the premises of contractor or subcontractor, contractor shall furnish or arrange to furnish without additional charge, all reasonable facilities and assistance. Inspection and tests shall be so performed by the Government as not to unduly delay work. Special performance tests shall be made as specified. The Government reserves the right to charge the contractor for any additional cost of inspection or test when articles are not ready when contractor requests inspection and test.

(C) Final inspection and acceptance of articles and services will be made after delivery, unless otherwise stated. If final inspection is at point other than premises of contractor or subcontractor, it shall be at the expense of the Government except for value of test samples used and rejected. Final inspection shall be conclusive except as to latent defects, fraud, or gross mistakes.

7. Dariance in quantity.Unless otherwise specified, any variation in the quantities called for not exceeding 10 percent, will be accepted only when caused by conditions of loading, shipping, packing, or allowance in manufacturing processes.

8. Defaults.-If contractor refuses or fails to make deliveries of articles or services conforming to specifications within time specified, or any extension thereof, or to perform faithfully any contract condition, contracting officer, without prejudice to other rights of the Government resulting from breach of contract conditions, may by written notice terminate the right of the contractor to proceed with any or all remaining deliveries. In event of such termination, the Government may, without prejudice to its other rights resulting from breach of contract conditions, obtain similar articles or services elsewhere and contractor and his sureties, if any, shall be liable to the Government for any excess cost occasioned the Government thereby: Provided, the contractor shall not be charged with any excess cost occasioned the Government thereby (1) when failure of contractor in making suitable deliveries is due to causes beyond his control which could not reasonably have been anticipated, and were without his fault or negligence, including but not restricted to, acts of God or public enemy, acts of the Government whether as contractor or sovereign; fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, unusually severe weather, delays and failure of subcontractor due to any such cause, unless contracting officer shall determine that articles or services to be furnished under the subcontract are procurable in open market, and (2) if contractor shall notify contracting officer in writing the cause of such failure within 10 days from beginning thereof, or within such further period as contracting officer may grant prior to date of final settlement of contract. Contracting officer shall decide the facts and extent of failure, and his decision shall be final and conclusive upon the parties hereto subject to appeal as provided in Terms 9 hereof, entitled “Disputes."

9. Disputes.-Unless otherwise provided herein, disputes involving questions of fact arising under this contract, which are not disposed of by agreement, shall be decided by contracting officer. Upon written request by contractor within 10 days from time of decision by contracting officer, the decision of contracting officer shall be reduced to writing and a copy thereof furnished the contractor. Within 30 days from furnishing such copy, contractor may appeal in writing to the Administrator of General Services, whose decision, or that of his duty authorized representative on such question of fact, shall he final and conclusive on the parties : Provided, that if no such appeal is taken, decision of the contracting officer on such questions of fact shall be final and conclusive. In the meantime, contractor shall proceed with performance.

10. Covenant against contingent fees.-Contractor warrants no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by contractor for purpose of securing business. For breach of this warranty, the Government shall have the right to annul this contract without liability or in its discretion to deduct from contract price or consideration, full amount of such commission, percentage, brokerage or contingent fee.

11. Officials not to benefit.-No member of or delegate to Congress or resident commissioner shall be admitted to any share or part of this contract or any benefit that may arise therefrom, unless it be made with a corporation for its general benefit.

12. Definitions.-(a) “Government” shall mean the United States of America. (b) “Administrator of General Services" shall include the Deputy Administrator of General Services, and the term “his duty authorized representa

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