shall prescribe forms for use by war contractors in connection with termination settlements and interim financing to the extent it deems necessary and feasible.

(b) The Director shall require the Government agencies performing functions under this Act to prepare such information and reports regarding terminations of war contracts, settlements of termination claims, and interim financing, as he deems necessary to assist him in appraising their operations or to assist him or other Government agencies in performing their functions under this Act, and may prescribe the terms and conditions upon which such information and reports shall be made available to other Government agencies. The Director may require any Government agency to furnish such information under its control as he deems necessary for the performance of his functions under this Act, but any such agency, in its discretion, may furnish any such information deemed by it to affect the national security only to the Director himself.

(c) The Director, by regulation, shall provide for making available to any interested Government agency such advance notice and other information on cutbacks in war production resulting from terminations or failures to renew or extend war contracts, as he deems necessary and appropriate.

(d) The Director shall make such investigations as he deems necessary_or desirable in connection with termination settlements and interim financing. For this purpose he may utilize the facilities of any existing agencies and if he determines that the facilities of existing agencies are inadequate, he may establish a unit in the Office of Contract Settlement to supplement and facilitate the work of existing agencies. He shall report to the Department of Justice any information received by him indicating any fraudulent practices, for appropriate action.

(e) Whenever any contracting agency or the Director believes that any settlement was induced by fraud, the agency or Director shall report the facts to the Department of Justice. Thereupon, (1) the Department of Justice shall make an investigation to determine whether such settlement was induced by fraud, and (2) until the Department of Justice notifies the contracting agency that in its opinion the facts do not support the belief that the settlement was induced by fraud, the contracting agency, by set-off or otherwise, shall withhold, from amounts owing to the war contractor by the United States under such settlement or otherwise, the amount of the settlement, or the portion thereof, which, in its opinion, was affected by the fraud. In any such case the Department of Justice shall take such action as it deems appropriate to recover payments made to such war contractor.

PRESERVATION OF RECORDS; PROSECUTION OF FRAUD

SEC. 19. (a) It shall be unlawful for any person willfully to secrete, mutilate, obliterate, or destroy, or cause to be secreted, mutilated, obliterated, or destroyed

(i) any records of a war contractor relating to the negotiation, award, performance, payment, interim financing, cancelation or other termination, or settlement of a war contract of $25,000 or more; or

(ii) any records of a war contractor and any purchaser relating to any disposition of termination inventory in which the consideration received by any war contractor or any Government agency is $5,000 or more,

until (1) five years after such disposition of termination inventory by such war contractor or Government agency, or (2) five years after the final settlement of such war contract, or (3) five years after the termination of hostilities in the present war as proclaimed by the President or by a concurrent resolution of the two Houses of Congress, whichever applicable period is longer.

As used in this subsection, the term "records" includes, but is not limited to, books, ledgers, checks and check stubs, payroll data, vouchers, memoranda, correspondence, inspection reports and certificates. Any corporation violating any provision of this subsection shall be fined not more than $50,000 and any natural person violating any provision of this subsection shall be fined not more than $10,000, or imprisoned for not more than five years, or both: Provided, however, That the Director, by regulation, may authorize the destruction of such records upon such terms and conditions as he deems appropriate, which may include the making and retaining of photographs or microphotographs. Photographs or microphotographs of any records made in compliance with such regulations of the Director shall have the same force and effect as the originals thereof would have and shall be treated as originals for the purpose of admissibility in evidence.

99189-44- 2

(b) The first section of the Act of August 24, 1942 (56 Stat. 747; title 18, U. S. C., Supp. II, sec. 590a), is amended to read as follows:

"The running of any existing statute of limitations applicable to any offense against the laws of the United States (1) involving defrauding or attempts to defraud the United States or any agency thereof whether by conspiracy or not, and in any manner, or (2) committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the present war, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until three years after the termination of hostilities in the present war as proclaimed by the President or by a concurrent resolution of the two Houses of Congress. This section shall apply to acts, offenses, or transactions where the existing statute of limitations has not yet fully run, but it shall not apply to acts, offenses, or transactions which are already barred by provisions of existing law."

(c) (1) Every person who makes or causes to be made, or presents or causes to be presented to any officer, agent, or employee of any Government agency any claim, bill, receipt, voucher, statement, account, certificate, affidavit, or deposition, knowing the same to be false, fraudulent, or fictitious or knowing the same to contain or to be based on any false, fraudulent, or fictitious statement or entry, or who shall cover up or conceal any material fact, or who shall use or engage in any other fraudulent trick, scheme, or device, for the purpose of securing or obtaining, or aiding to secure or obtain, for any person any benefit, payment, compensation, allowance, loan, advance, or emolument from the United States or any Government agency in connection with the termination, cancelation, settlement, payment, negotiation, renegotiation, performance, procurement, or award of a contract with the United States or with any other person, and every person who enters into an agreement combination, or conspiracy so to do, (1) shall pay to the United States an amount equal to 25 per centum of any amount thereby sought to be wrongfully secured or obtained but not actually received, and (2) shall forfeit and refund any such benefit, payment, compensation, allowance, loan, advance, and emolument received as a result thereof and (3) shall in addition pay to the United States the sum of $2,000 for each such act, and double the amount of any damage which the United States may have sustained by reason thereof, together with the cost of suit.

(2) The several district courts of the United States, the District of Columbia, the several district courts of the Territories of the United States, within whose jurisdictional limits the person, or persons, doing or committing such act, or any one of them, resides or shall be found, shall, wheresoever such act may have been done or committed, have full power and jurisdiction to hear, try, and determine such suit, and such person or persons as are not inhabitants of or found within the district in which suit is brought may be brought in by order of the court to be served personally or by publication or in such other reasonable manner as the court may direct.

(d) The provisions of section 35-A of the Criminal Code (18 U. S. C., sec. 80) shall apply to any statement, representation, bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition made or used or caused to be made or used for any purpose under this Act or under any regulations pursuant to this Act.

GENERAL PROVISIONS

SEC. 20. (a) Each contracting agency shall have authority, notwithstanding any provisions of law other than contained in this Act, (1) to make any contract necessary and appropriate to carry out the provisions of this Act; (2) to amend by agreement any existing contract, either before or after notice of its termination, on such terms and to such extent as it deems necessary and appropriate to carry out the provisions of this Act; and (3) in settling any termination claim, to agree to assume, or indemnify the war contractor against, any claims by any person in connection with such termination claims or settlement. This subsection shall not limit or affect in any way any authority of any contracting agency under the First War Powers Act, 1941, or under any other statute.

(b) Any contracting agency may prescribe the amount and kind of evidence required to identify any person as a war contractor, or any contract, agreement, or purchase order as a war contract for any of the purposes of this Act. Any determination so made that any person is a war contractor, or that any contract, agreement, or purchase order is a war contract, shall be final and conclusive for any of the purposes of this Act.

(c) There are hereby authorized to be appropriated such sums as may be necessary for administering the provisions of this Act.

(d) All policies and procedures relating to termination of war contracts, termination settlements, and interim financing, prescribed by the Director of War Mobilization or any contracting agency, in effect upon the effective date of this Act, and not inconsistent with this Act, shall remain in full force and effect unless and until superseded by the Director in accordance with this Act, or by regulations of the contracting agency not inconsistent with this Act or the policies prescribed by the Director.

(e) Nothing in this Act shall be deemed to impair or modify any war contract or any term or provision of any war contract or any assignment of any claim under a war contract, without the consent of the parties thereto, if the war contract, or the term, provision, or assignment thereof, is otherwise valid.

(f) Any contracting agency shall authorize or direct its officers and employees to advise, aid, and assist war contractors in preparing and presenting termination claims, in obtaining interim financing, and in related matters, to such extent as it deems desirable. If the officer or employee receives therefor no benefit or compensation of any kind, directly or indirectly, from any war contractor, such advice, aid, or assistance shall be treated as part of his official duties and shall not constitute a violation of section 109 of the Criminal Code (18 U. S. C. 198) or of any other law.

(g) The Smaller War Plants Corporation is hereby directed

(1) to disseminate information among small business concerns with respect to interim financing, termination settlements, removal and storage of termination inventories pursuant to the provisions of this Act and the regulations of the Director; and

(2) to assist small business concerns in connection with the securing of interim financing and the preparation of applications for such interim financing; the effecting of termination settlements; and the removal and storage of termination inventories, in order to assure that small business concerns receive fair and equitable treatment from prime contracts and intermediate subcontractors in connection with the termination of war contracts.

OTHER FUNCTIONS OF THE DIRECTOR

SEC. 21. In addition to his other functions under this Act, the Director shall(a) promote the training of personnel for termination settlement and interim financing by contracting agencies, war contractors, and financing institutions;

(b) collaborate with the Smaller War Plants Corporation in protecting the interests of smaller war contractors in obtaining fair and expeditious termination settlements and interim financing;

(c) promote decentralization of the administration of termination settlements and interim financing by fostering delegation of authority within contracting agencies and to war contractors, to the extent he deems necessary and feasible;

(d) consult with war contractors through advisory committees or such other methods as he deems appropriate.

USE OF APPROPRIATED FUNDS

SEC. 22. Any contracting agency is authorized

(a) to use for interim financing, the payment of claims, and for any other purposes authorized in this Act any funds which have heretofore been appropriated or allocated or which may hereafter be appropriated or allocated to it, or which are or may become available to it, for such purposes or for the purposes of war production or war procurement;

(b) to use any such funds appropriated, allocated, or available to it for expenditures for or in behalf of any other contracting agency for the purposes authorized in this Act;

(c) to determine by agreement, joint estimate, or any other method authorized by the Director, the part of any expenditure made pursuant to subsection (b) hereof to be paid by each contracting agency concerned and to make transfers of funds between such contracting agencies accordingly. Transfers of funds between appropriations carried upon the books of the Treasury shall be made by the Secretary of the Treasury in accordance with joint requests of the contracting agencies involved.

DELEGATION OF AUTHORITY

SEC. 23. (a) The Director may delegate any authority and discretion conferred upon him by this Act to any Deputy Director, and may delegate such authority and discretion, upon such terms and conditions as he may prescribe, to the head of any Government agency to the extent necessary to the handling and solution of problems peculiar to that agency.

(b) The head of any Government agency may delegate any authority and discretion conferred upon him or his agency by or pursuant to this Act to any officer, agent, or employee of such agency or to any other Government agency, and may authorize successive redelegations of such authority and discretion.

(c) Any two or more Government agencies may exercise jointly any authority and discretion conferred upon each of them individually by or pursuant to this Act.

(d) Nothing in this Act shall prevent the Director from exercising any authority conferred upon him by any other statute.

APPLICABILITY

SEC. 24. (a) This Act shall become effective twenty days after the date of its enactment. With the exception of the provisions of paragraphs (b), (c), (d), and (e), of section 12, and of sections 6, 7, 8, 9, 10, and 13 this Act shall be applicable in the case of any terminated war contract which has been finally settled at or before the effective date of this Act.

(b) Nothing in this Act shall limit or affect any authority conferred by the Act of March 11, 1941 (55 Stat. 31), as amended, or Acts supplemental thereto. SEC. 25. Subject to policies prescribed by the Director, any contracting agency may exempt from some or all of the provisions of this Act (a) any war contract made or to be performed outside the continental limits of the United States or in Alaska, or (b) any termination inventory situated outside of the continental limits of the United States or in Alaska, or (c) any modification of a war contract pursuant to its terms for the purpose of changing plans or specifications applicable to the work without substantially reducing its extent.

SEPARABILITY OF PROVISIONS

SEC. 26. If any provision of this Act, or the application of such provision to any person or circumstance, is held invalid, the remainder of this Act or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

SHORT TITLE

SEC. 27. This Act may be cited as the "Contract Settlement Act of 1944." Mr. WALTER. The purpose of the meeting is to hear the statements of Mr. Vinson and Mr. Hancock relative to the proposed bill, H. R. 4789, for the settlement of claims arising from terminated war contracts. In order to accommodate Mr. Vinson, who has an important engagement later this afternoon, we shall hear him first.

STATEMENT OF HON. CARL VINSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA AND CHAIRMAN OF THE HOUSE COMMITTEE ON NAVAL AFFAIRS

[NOTE: Some statements of John M. Hancock and Lt. Col. H. C. Rose appear in connection with Mr. Vinson's statement.]

Mr. VINSON. Mr. Chairman, in the investigation the Naval Affairs Committee made in regard to H. R. 4469, we were guided in large measure by the conclusions of Mr. Baruch and Mr. Hancock. Fortunately we had the benefit of their report, and I am frank to say that without that report I think that our committee, this committee, or any other committee would have been considerably at a loss as to

how to deal with this question. So we are all indebted to Mr. Hancock and Mr. Baruch for the fine approach they have made to the important question of the termination of contracts.

Now, we were so much impressed with certain phases of it that, without copying it word for word, we did embody in our bill the three principles and much of the language and the conclusions that they set out. For instance, in connection with the standards, we took them all, and we think we were on wise ground in doing so. Here is the fundamental reason why we should do so. What are we sent here for? Are we sent here just for the purpose of being in Congress, or are we sent here to legislate? Wherever it is humanly possible to legislate, we ought to legislate, and with as much clarity and certainty as it is humanly possible to do so. That is what we sought to do when we incorporated in our bill the standards that Mr. Hancock says the Director should give consideration to. That is, the principles we set out are the principles that Mr. Hancock advocated the Director should take into consideration.

Suppose you do not set them out. Here is a businessman sitting back in Philadelphia whose contract has been terminated, and the Director is down here. The Director has Mr. Hancock's report to go by, but there is nothing to make him go by it unless he wants to go by it. So we think that Congress ought to incorporate, as much as possible, what should be considered of the factors. In other words, the Director could change his mind tomorrow and say, "I do not these objectives; I want some other factors." We tried this identical thing on renegotiation-and renegotiation originated with our committee. At first we did not have any factors. Later on we had to hold hearings. Everybody in the country who testified there was critical of the fact and said, "We do not know what factors are going to be considered."

Mr. WALTER. Your idea was to eliminate any possibility of uncertainty.

Mr. VINSON. That is right; exactly. Any bill that does that is on the right line.

Mr. BRYSON. In other words, you are writing the rules of procedure for the game before you start.

Mr. VINSON. That is right. Industry knows or the contractor knows that certain things can be set out in his bill of particulars that will be given consideration. Of course, we do not require the Director or, even on our approach, the contracting officers to evaluate each one in a written report. But these are factors that should be considered, and we notify business of that. The soundness of it lies in the fact that Congress is legislating instead of a director. If there is one thing that everybody in this country has grown sick of, it is legislation by the departmntes, when nobody knows what they are going to do; and the people have a right to be tired of that.

I think that covers the whole case. We took what Mr. Hancock said, we abbreviated and fixed it up, and we have in there everything that he recommended as to the factors that should be considered. We put them in this bill, and I am happy to see them in there. Captain Strauss, who aided us immensely in the preparation of the bill, was highly pleased with that viewpoint. The last letter that the late Secretary of the Navy wrote was a letter endorsing this bill in its general principles.