after the termination of hostilities the running of any existing statute of limitation applicable to any Federal offense involving fraud against the United States or connected with the negotiation, procurement, award, performance, payment for interim financing, cancelation or other terinination, or settlement of any war contract.

Subsection (c) imposes a civil penalty on any false or fraudulent claim, bill, receipt, voucher, statement, account certificate, affidavit, or deposition or any concealment of a material fact or any other device for the purpose of obtaining or aiding to obtain any benefit from the United States in connection with any contract with the United States or with any other person or any conspiracy for any of these purposes. Any person doing so must pay to the United States 25 percent of the amount wrongfully sought but not received, and must forfeit any benefit received. In addition, he must pay the United States $2,000 for each such act and double the amount of any damages which the United States may have sustained as a result, together with the costs of suit. The district courts within whose jurisdiction any such person is found are given jurisdiction to try any such suit.

Subsection (d) deals with the criminal penalties for fraud. It makes it clear that the provisions of section 35-A of the Criminal Code (18 U. S. C., sec. 80) also apply to any such statement, representation, or other document made or used or caused to be made or used for any purpose under the act. Section 35-A imposes criminal penalties up to $10,000 in fines and up to 10 years' imprisonment for fraudulent actions involving the Government.

GENERAL PROVISIONS

Section 20 contains miscellaneous provisions relating to the administration of the act.

Subsection (a) authorizes any contracting agency to make any contract or amendment of a contract necessary and appropriate to carry out the provisions of the act; in settling any termination claim, to assume or indemnify the war contractor against any claim by any person in connection with such termination claims or settlement.

Subsection (b) authorizes any contracting agency to prescribe the amount and kind of evidence required to identify any person as a war contractor or any contract as a war contract for the purposes of the act and makes any determination thereunder final and conclusive for any of the purposes of this act.

Subsection (c) authorize appropriations to be made for the administration of the act.

Subsection (d) continues in effect, until superseded by the Director or the agency, all policies and procedures relating to terminations and interim financing heretofore prescribed by the Director of War Mobilization or any contracting agency, and in effect upon the effective date of the act, if not inconsistent with it.

Subsection (e) makes it clear that this act is not intended to impair or modify any valid war contract or any valid term or provision thereof, or any assignment of any claim thereunder without the consent of the parties thereto.

Subsection (f) permits any contracting agency to authorize or direct its employees to aid war contractors in preparing and presenting termination claims and obtaining interim financing as a part of their official duties, and exempts any such aid from section 109 of the Criminal Code or any other law, if the employee receives no compensation directly or indirectly from the war contractor.

For the protection of smaller war contractors, the Smaller War Plants Corporation is directed by subsection (g) to inform small business concerns regarding interim financing, termination settlements and property removal, and to assist them in making such settlements, obtaining such financing and in removing inventories.

USE OF APPROPRIATED FUNDS

Section 22 authorizes any contracting agency to use for interim financing, the payment of claims, and for any other purposes authorized in the act, any funds appropriated to it for those purposes or for the purposes of war production or war procurement, and to expend any such funds on behalf of any other contracting agency for the purposes authorized in the act. Where such joint expenditures are made, the agencies are authorized to allocate the expenditures among them by agreement, joint estimate, or any other method authorized by the Director, and to transfer funds between them accordingly.

OTHER FUNCTIONS OF THE DIRECTOR

In addition to his other functions under the act, section 21 requires the Director (1) to promote the training of personnel for termination settlements and interim financing, (2) to collaborate with the Smaller War Plants Corporation in aiding smaller war contractors to obtain expeditious settlements and financing, (3) to promote decentralization of administration, and (4) to consult with war contractors through appropriate methods.

DELEGATION OF AUTHORITY

Section 23 authorizes the Director to delegate his authority and discretion to any Deputy Director, or to the head of any Government agency to the extent necessary for handling problems peculiar to that agency. The head of any Government agency may delegate his authority and discretion to employees of his agency or of any other. agency. Two or more Government agencies may exercise jointly any authority and discretion conferred upon them individually by or pursuant to the act.

APPLICABILITY

Sections 24 and 25 deal with the application of the act.

Under section 24 it becomes effective 20 days after its enactment. However, certain of its provisions do not apply to any terminated war contract which has theretofore been finally settled. Nothing in the act limits or affects any authority conferred by the Lend-Lease Act.

Under section 25 any contracting agency may exempt from the act (1) any war contract made or to be performed outside the continental United States or in Alaska, or (2) any termination inventory situated outside the continental United States or in Alaska, or (3) any modification of a 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

Section 26 contains the usual separability clause.

SHORT TITLE

Section 27 permits the act to be cited as the "Contract Settlement Act of 1944."

(End of the report.)

STATEMENT OF HON. ESTES KEFAUVER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE AND MEMBER OF THE HOUSE COMMITTEE ON THE JUDICIARY

Mr. KEFAUVER. Mr. Chairman, the great need for legislation in the field of contract termination has been emphasized repeatedly by Members of Congress, by the heads of governmental agencies concerned, as well as by industry and labor groups. The present procedure of contract termination is cumbersome and results in unnecessary delays which are injurious to our economy. In the event of wholesale terminations, industrial and economical chaos and wholesale unemployment would result, unless legislation to permit the quick termination of contracts is enacted. This is one of the most important matters before Congress and the Nation at the present time. Legislation for the quick payment of war contracts in order to enable them to reconvert their industries to civilian production is of paramount importance to the industries themselves, to the workers in the industries, and to the national economy.

It is true that there are certain human elements which must be given consideration. Provision must be made to take care of any unemployment that might result during the period of reconversion. Personally, I was hopeful that more provisions to take care of the human elements could be included in this bill, but it was decided in the Senate that contract termination legislation should be passed immediately and it was generally agreed that legislation on the question of unemployment and the like would be given early consideration and passed at this session of Congress. I sincerely hope that this may be done.

I understand that at the present time the Senate Military Affairs Committee, the Senate Post-war Committee, and the Post-war Planning Committee of the House of Representatives are giving consideration to these problems.

In the Senate a bill has been introduced by Senator Kilgore of West Virginia. The latest version of the bill is contained in S. 1893. If the House Judiciary Committee has jurisdiction of this legislation, which I think should be the case, I am sure this committee will give

early and earnest consideration to the so-called human problems of · reconversion.

The various congressional committees have given early consideration to the termination problem. It is a great credit to the standing committees that they have tackled the problem at an early date. I also think the Members of the House owe a debt of gratitude to the Postwar Planning Committee, under the chairmanship of the gentleman from Mississippi, Mr. Colmer, for the thorough and capable consideration given this problem by that special committee. It is fortunate that the chairman of the subcommittee of the Post-war Committee handling contract termination is also the chairman of the subcommittee of the Judiciary Committee and we may be sure that the Honorable Francis Walter, who occupies that dual role, is especially well-informed and able to take the lead in handling this problem in the House.

The Special Committees on Small Business of both Houses have studied the problem in great detail, especially as it relates to small business.

HOUSE MILITARY AFFAIRS COMMITTEE

The distinguished chairman of that committee introduced a bill H. R. 3022, June 22, 1943, "to provide authority to the Secretary of War to use funds now or hereafter appropriated for adjustment of contracts, and for other purposes" which occasioned the thorough hearings that began on June 23 and continued in open session until the late fall and resulted in the reporting out of the bill as amended March 20, 1944, and which is now in the Rules Committee.

Bearing in mind that there is much common ground in all of our bills that are either before the Rules Committee or are here, it is to their points of difference that I wish to direct attention. For instance, in H. R. 3022 there are provisions for "Advance notice of termination," "Removal and storage of materials," "Interim financing and appeals," to mention only four aspects, out of many, which everyone who has studied the problem agrees are among the absolute basic elements of the contract settlement problem that must be dealt with by legislation.

H. R. 3022 sets up a War Contracts Settlement Board under the direction of the Comptroller General which has the duty of passing on every settlement after audit, before it is deemed final.

The hearings of the committee take over 600 printed pages of testimony and exhibits. Among these pages can be found the crux of the matters in opposition. In general the major witness, as we realize, testified before all the committees concerned. The Under Secretary of War made a very thorough review at pages 145-158.

The Comptroller General's main contention regarding lack of protection to the government short of audited review of settlements will be found on pages 183 to 221. A letter stating his position begins at page 185.

The Under Secretary asked the committee to present material refuting the Comptroller General's contention, which testimony will be found on pages 251-262.

The business point of view on these disputed matters was well put by a number of interests who were in general agreement especially regarding the vital necessity for rapid settlement. Only less vehe

mently did they claim the essentiality that settlements arrived at with the agencies be final and conclusive when not made by fraud. Representative testimony of this character will be found in the remarks of a spokesman of the aviation industry (pp. 268-295), a spokesman from many subcontractors (pp. 376-390) and from the National Association of Manufacturers (pp. 441-451). Business' objections to the methods and procedures of the General Accounting Office will be found at pages 451 to 463, particularly beginning at 460. These citations, taken from the Military Affairs Committee, are, I am sure you will find, representative of these phases of the settlement problem which have evoked disagreement.

BRIEF ANALYSIS OF NAVAL AFFAIRS BILL (H. R. 4469)

The Naval Affairs Committee began hearings March 14, 1944, and on April 29, 1944, the committee's chairman introduced H. R. 4469. This bill calls for an interdepartmental committee to state the detailed policies for administration of the bill.

The settlements are to be made between the agencies and contractors in terms of policies set down by the committee and along the lines of cost principles (scc. 7b) reminiscent of the Baruch-Hancock principles published January 8, 1944. The Comptroller General does not review settlements under this bill.

The distinguished chairman of the Naval Affairs Committee is extremely well versed in the problems of contract termination. This is, of course, true of the other members of the Naval Affairs Committee.

H. R. 4392 AND H. R. 4717

On March 13, 1944, I introduced in the House H. R. 4392, which was referred to this committee. This bill, with the deletion of the surplus property disposal feature, is substantially the same as S. 1730. It set up the Office of Demobilization and also provided for the method of terminating war contracts. Later in the Senate it was decided to consider contract termination separately from the Office of War Demobilization, whereupon S. 1718 was introduced. Therefore, on May 1, I introduced H. R. 4717, which was referred to this committee. This bill was substantially the same as S. 1718, except that a new section (sec. 4) was added. In section 4 I undertook to compromise the contentions of the groups who felt that the Comptroller General should audit all settlements and the group who felt that the Comptroller General should have part in contract termination only in a very limited way. The compromise I proposed in section 4 provided that as to those war contractors who conducted their business in such a way as to show that their books could be relied upon and they had followed through their contract with reasonable efficiency, the settlement should be made without an audit, but as to those few irresponsible contractors who did not meet this test, an audit should be done by the contracting agency. This audit would determine certain necessary information before the settlement was made.

In other respects the bill followed S. 1718 rather closely.

On May 5, I made a statement which is printed at page 4125 of the Congressional Record, in which I explained in more detail this provision of H. R. 4717.