Mr. WARREN. Congressman, I think that Mr. Yates will bear me out when I say that in conversation after conversation, when we call certain things to their attention, it is generally met with a shrug of the shoulder and condoned under the specious plea, "We have got to win the war."

Mr. BATES. Then, your point is that these officers just cannot be trusted insofar as making proper payments are concerned? You question the integrity, apparently, of everybody in authority?

Mr. RIVERS. Oh, no.

Mr. BATES. He said that when he calls these matters to the attention of the contracting officers, apparently there is nobody who cares anything about them.

Mr. WARREN. I am also talking about waste and inefficiency.

Mr. BATES. I have the greatest admiration for the Comptroller General. I think he has done an excellent job, and I think he wants to continue it. But I do not like to see a widespread statement cast over every agency of the Government.

Mr. WARREN. Oh, now, I am afraid you are getting me wrong.

Mr. BATES. The language is pretty strong. I want to have you clarify it.

Mr. WARREN. I have clarified it.

Mr. BATES. You say there is apparently nobody who cares about the waste, illegal expenditures, and approval of bills, and that you are met with a shrug of the shoulders. What other intimations do you want to leave with the committee?

Mr. WARREN. Frankly, I do not know if anybody cares anything about it.

Mr. BATES. Then, they are satisfied with corruption and waste? Mr. WARREN. No; I would not and do not say corruption.

Mr. BATES. Illegal payments?

Mr. WARREN. I said extravagance and waste.

Mr. BATES. And illegal payments?

Mr. WARREN. Extreme liberality.

Mr. BATES. Not illegal payments? You used the words "illegal payments; illegal aproval; with the aiding and abetting of governmental officials."

Mr. WARREN. Well, I gave an illustration of where we suspended and collected back $150,000 of a payment made under a contract because it was not provided in the contract. Now, you can call it unwise, illegal, or anything you want to, but later on they took the same item, amended the contract, made it legal, and paid it again.

The CHAIRMAN. I may say this along the line the Comptroller is talking about, and I want this for the record, because Mr. Maas and Mr. Drewry are acquainted with it. The department and the bureaus are required to submit to the committee the acquisitions of all properties. In an effort to get around that, there have been certain instances where contractors were told to go out and buy a piece of property and were told, "You will not have to go before Mr. Maas and Mr. Vinson of the Naval Affairs Committee, but we will reimburse you in dollars and cents." So I had to write a letter to the Secretary and tell him that had to stop, and they had to come straight to the committee. But I do not want this hearing at this point to be diverted by this statement to the Comptroller. I want it to deal with this bill and to

see how the Comptroller feels that he should be in the picture and how an independent agency can be woven into the cloth without interfering with the speedy settlement of the cases.

Mr. WARREN. I would not have been fair with this committee, Mr. Chairman, and with other committees had I not frankly told you the reasons that actuated me in proposing that there be an independent check by somebody over these expenditures, and had I not known these things and told you and other committees. I am saying nothing new here today.

The CHAIRMAN. In other words, Mr. Warren, your general statement about shoveling out money by the spadefuls, and all that, muddies the waters considerably; and when the water is muddy, it is true that it always gives the opportunity to drive for the objective you have in mind. But that does not have any particular bearing on what I want to talk to you and Mr. Yates about. What I want to know is how you should get a record to enable you to have a voice in the matter. One of your complaints is that you have no voice in there. It is just a few little general statements. We have sought to set out in the bill certain factors which must be considered. Your statement is that there must be some honest evaluation given to each one of these factors to support their findings. That would create a record for which you could have some knowledge upon what grounds the decision was reached.

Mr. YATES. That is right.

The CHAIRMAN. If you had such a record as that, then the only thing that the bill does not give you now would be the right to hold that accounting officer or that contractor responsible for having received an overpayment on the facts that have been evaluated. Mr. YATES. No; that is only part of it.

The CHAIRMAN. All right; what is the rest of it?

Mr. YATES. It would serve no particular purpose to have the most complete record, as far as the general items in the claim are concerned, if you are going to provide for the execution of a settlement agreement. A complete record after the settlement becomes final would only enable detection of fraud.

The CHAIRMAN. Suppose a court of review has a record after the jury has reached its decision. The court determines only whether the facts justified that conclusion. The court might have a different opinion if it did not have the statement of facts. But with this statement of facts you will not be in a position to upset that. What I am driving at is that if the statement of facts support it, why are you not bound by it?

Mr. YATES. If the parties litigant before the court have agreed and signed and executed the agreement, the court could not change that agreement.

The CHAIRMAN. I know that, but if the jury has all the evidence before it and reaches a certain decision or a certain final verdict, the court will see if the facts justify it. The judge who writes that opinion might have a different viewpoint and say, "If I had been sitting as a juror, I would have evaluated certain things; but they have done it." Now, why should not the contracting officers have the right to evaluate these facts and give you the basis upon which they have evaluated them; and then, if those facts justify their evaluation, what

Mr. MOTT. It would seem to me that your function, then, is reduced to a determination of whether or not the contracting party added or subtracted correctly.

Mr. WARREN. That is it, exactly. Here is one right here, gentlemen, of two pages, in the amount of $614,450.49.

Mr. GRANT. Army or Navy?

Mr. WARREN. This one here happens to be Navy. I have some Army ones here. Here is one for $502,000 from the Army.

Mr. IzAC. Then, if the voucher comes over

Mr. WARREN. The voucher comes right with this. There is the termination. This is the voucher. A hundred-dollar clerk is sitting there. He will look and say, "Yes, there is the termination agreement for $614,000." He will look over here and say, "Yes, there is the voucher for $614,000." Check; the audit is made. Now, does Congress want that?

The CHAIRMAN. Then, your point, Mr. Warren, is that there must be substantiating evidence and a substantiating record filed with those determinations?

Mr. WARREN. Yes, sir.

The CHAIRMAN. Then, if there is substantiating evidence filed, you would be in a position to determine whether or not the contracting officer reached a right conclusion from the statement of facts that he has had?

Mr. YATES. May I interpolate there?

The CHAIRMAN. Yes.

Mr. YATES. Let us not overlook the very important thing involved in this immediate discussion. If the law provides, as do the present administrative directives, for an agreed settlement, except with respect to fraud, it would make no difference how much evidence we had; we still could not go behind the settlement agreement; it would be binding on all parties.

The CHAIRMAN. I understand that, but even with that record, unless you were in the picture, it would not be of any help to you.

Mr. YATES. Except as the record might enable detection of fraud. The CHAIRMAN. It would do this: If the record did not support the voucher, then you would have the right to recheck the voucher.

Mr. YATES., No, Mr. Chairman, not if the voucher had been paid in accordance with the agreement.

The CHAIRMAN. But you do not pay the voucher; the voucher is not paid.

Mr. YATES. The voucher is paid before it reaches the General Accounting Office.

The CHAIRMAN. Yes; that is right.

Mr. BATES. I want to get back to the statement of the Comptroller General. I want him to elaborate the position that he has taken today, on the basis that he knows payments bordering on scandal are being made under his very eyes. He further makes the statement that these illegal payments are being aided and abetted by public officials. That is pretty strong language.

Mr. WARREN. I am coming to that, if I may be permitted to do so. Mr. BATES. That is fine.

Mr. WARREN. Mr. Chairman, I should like to say that I am certainly no scold. I have never been either a reformer or a crusader. Power is the last thing in the world that I seek or crave. Down at the Gen

eral Accounting Office we do all possible to keep out of the administrative field and to keep within the confines of the Budget and Accounting Act. We have no pwer to stop or curb waste or extravagance. We can only report it when it comes to our attention, and this we have frequently done.

Gentlemen, all that I am trying to do is to insist that we have just a little ordinary, common decency in the making of war contracts, the approval of payments under the same, and their termination. That is a trust I think we all owe to the public substance.

I have testified before, and I now again repeat, that certain contracting officers have dished and shoveled out and given away the property and the money of the United States with reckless abandon. Some are capable and efficient, some are highly inept and inefficient, and some have been found to be plain crooks and thieves. Mr. Yates and I were personally assured by a very high official that a survey had been made of all contracting officers; that the bad and inefficient had been weeded out; and that as of that date only those of high rank were carrying on these important duties. In spite of that assurance, just 10 days thereafter, a contracting officer of high rank and wearing the uniform of this country was arrested with about $15,000 of marked bills on his person in the New York area. The tragedy of all this is that there does not seem to be anybody who cares anything about it.

When I testified before the House Committee on Military Affairs last October, I read into the record 270 cases totaling millions of dollars that the General Accounting Office had suspended, which had been approved and paid by various contracting officers. I may say, Mr. Chairman-and I say this advisedly-that not one statement that I have made in reference to this subject from last July on down has been refuted in any way.

Now, here is an illustration, Mr. Bates. The General Accounting Office suspended and collected back an item of $150,000 that was admitted to be beyond the terms of the contract. Do you know what happened, and what is happening every day? Why, they will just go ahead and amend the contract and include in it and pay the amount that we have previously collected and deducted as being beyond the terms of the contract. That goes on frequently.

I was moved to suggest that an independent agency be given the right to review these things, as I previously stated, because day after day I have sat there and seen these approvals, and they have been urged upon us night and day by some in the departments to approve. Mr. Yates and I said just a few days ago that if sometime, somewhere, somehow they would come to us and say, "Listen; this should not be paid. The Government should not pay for this; this is wrong;" why, we would be the most surprised people in the world.

Gentlemen, that never happens. It is always with the audacity of an Oliver Twist that they say, "Please, sir; we want more."

Mr. BATES. You made incriminating statements about the efforts to have these payments made illegally. You followed that up by making the further statement that the tragedy of all this is that apparently it is something that nobody cares anything about. Do you mean to intimate that high-ranking officials in the Government service, having charge of these administrative orders, care nothing about these illegal acts?

Mr. WARREN. Congressman, I think that Mr. Yates will bear me out when I say that in conversation after conversation, when we call certain things to their attention, it is generally met with a shrug of the shoulder and condoned under the specious plea, "We have got to win the war."

Mr. BATES. Then, your point is that these officers just cannot be trusted insofar as making proper payments are concerned? You question the integrity, apparently, of everybody in authority?

Mr. RIVERS. Oh, no.

Mr. BATES. He said that when he calls these matters to the attention of the contracting officers, apparently there is nobody who cares anything about them.

Mr. WARREN. I am also talking about waste and inefficiency.

Mr. BATES. I have the greatest admiration for the Comptroller General. I think he has done an excellent job, and I think he wants to continue it. But I do not like to see a widespread statement cast over every agency of the Government.

Mr. WARREN. Oh, now, I am afraid you are getting me wrong.

Mr. BATES. The language is pretty strong. I want to have you clarify it.

Mr. WARREN. I have clarified it.

Mr. BATES. You say there is apparently nobody who cares about the waste, illegal expenditures, and approval of bills, and that you are met with a shrug of the shoulders. What other intimations do you want to leave with the committee?

Mr. WARREN. Frankly, I do not know if anybody cares anything about it.

Mr. BATES. Then, they are satisfied with corruption and waste? Mr. WARREN. No; I would not and do not say corruption.

Mr. BATES. Illegal payments?

Mr. WARREN. I said extravagance and waste.

Mr. BATES. And illegal payments?

Mr. WARREN. Extreme liberality.

Mr. BATES. Not illegal payments? You used the words "illegal payments; illegal aproval; with the aiding and abetting of governmental officials."

Mr. WARREN. Well, I gave an illustration of where we suspended and collected back $150,000 of a payment made under a contract because it was not provided in the contract. Now, you can call it unwise, illegal, or anything you want to, but later on they took the same item, amended the contract, made it legal, and paid it again.

The CHAIRMAN. I may say this along the line the Comptroller is talking about, and I want this for the record, because Mr. Maas and Mr. Drewry are acquainted with it. The department and the bureaus are required to submit to the committee the acquisitions of all properties. In an effort to get around that, there have been certain instances where contractors were told to go out and buy a piece of property and were told, "You will not have to go before Mr. Maas and Mr. Vinson of the Naval Affairs Committee, but we will reimburse you in dollars and cents." So I had to write a letter to the Secretary and tell him that had to stop, and they had to come straight to the committee. But I do not want this hearing at this point to be diverted by this statement to the Comptroller. I want it to deal with this bill and to