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COMMITTEE ON THE JUDICIARY

HATTON W. SUMNERS, Texas, Chairman EMANUEL CELLER, New York

CLARENCE E. HANCOCK, New York ZEBULON WEAVER, North Carolina

EARL C. MICHENER, Michigan FRANCIS E. WALTER, Pennsylvania

JOHN M. ROBSION, Kentucky SAM HOBBS, Alabama

CHAUNCEY W. REED, Illinois JOHN H. TOLAN, California

JOHN W. GWYNNE, Iowa WILLIAM T. BYRNE, New York

LOUIS E. GRAHAM, Pennsylvania DAVE E. SATTERFIELD, JR., Virginia

RAYMOND S. SPRINGER, Indiana ESTES KEFAUVER, Tennessee

JOSEPH E. TALBOT, Connecticut JOSEPH R. BRYSON, South Carolina

FRANK FELLOWS, Maine FADJO CRAVENS, Arkansas

EARL R. LEWIS, Ohio SAM M. RUSSELL, Texas

HARRY L. TOWE, New Jersey
THOMAS J. LANE, Massachusetts

JOHN JENNINGS, JR., Tennessee
MARTIN GORSKI, Illinois
MICHAEL A. FEIGHAN, Ohio

FRANK CONNELL, Clerk
VELMA SMEDLEY, Assistant Clerk

SUBCOMMITTEE NO. 3

FRANCIS E. WALTER, Pennsylvania, Chairman ESTES KEFAUVER, Tennessee

JOHN W. GWYNNE, Iowa JOSEPH R. BRYSON, South Carolina

JOSEPH E. TALBOT, Connecticut THOMAS J. LANE, Massachusetts

EARL R. LEWIS, Ohio

CONTENTS

Pago

MAY 17, 1944

Statement of -

Hon. Carl Vinson, a Representative in Congress from the State of

Georgia, and chairman of the House Committee on Naval Affairs.--

(Some statements of John M. Hancock and Lt. Col. H. C. Rose

appear in connection with Mr. Vinson's statement.)
Brief summary of most important differences between Vinson bill (H. R,

4469) and Murray-George bill (S. 1718)----------------

Analysis of S. 1718....

Statement of -

John M. Hancock, acting chairman, Joint Contract Termination

Board, and Lt. Col. H. C. Rose, secretary, Joint Contract Termina-

tion Board..

M. D. Folsom, director of staff, House Special Committee on Post-

War Economic Policy and Planning---

-----

Report of-

House Special Committee on Post-War Economic Policy and Planning

on settlement of claims arising from terminated war contracts, dated

May 12, 1944 (H. Rept. No. 1443), submitted by Mr. Folsom...

Statement of-

Hon. Estes Kefauver, a Representative in Congress from the State of

Tennessee, and a member of the House Committee on the Judiciary -

Exhibits to statement of Hon. Estes Kefauver:

Comptroller General's letter of April 13, 1944.--

Comptroller General's letter of May 11, 1944..

Letter of Bernard M. Baruch, Office of 'War Mobilization, dated May

15, 1944.--

Comptroller General's letter of May 16, 1944 (with reference to cost

standards) ----

Letter of Chester Bowles, Office of Price Administration, dated May

13, 1944.--.

Resolution of Council of American Institute of Accountants, dated

May 9, 1944-----

Letter from National Association of Manufacturers, dated May 17,

1944.---

Letter from Maury Maverick, Chairman, Smaller War Plants Corpo-

ration, dated May 4, 1944.-..

-------

STATEMENTS BEFORE WAR CONTRACTS SUBCOMMITTEE OF SENATE

MILITARY AFFAIRS COMMITTEE

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Heraller War Plauta ( fup , wit, binti ha ]0, 1944 suggesting

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Smaller War Plants ('

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St. Louis (hamber of

1944.--

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Federated Industrie of Wax

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CONTRACT TERMINATION

WEDNESDAY, MAY 17, 1944

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE No. 3 OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C. [EXECUTIVE SESSION] Subcommittee No. 3 of the Committee on the Judiciary met at 2 o'clock p. m., pursuant to call, Hon. Francis E. Walter, chairman of the subcommittee, presiding.

(The subcommittee had under consideration H. R: 4789, which is as follows:)

(H. R. 4789, 78th Cong., 2d sess.) A BILL To provide for the settlement of claims arising from terminated war contracts, and for other

purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

OBJECTIVES OF THE ACT SECTION 1. The Congress hereby declares that the objectives of this Act arem

(a) to facilitate maximum war production during the war, and to expedite reconversion from war production to civilian production as war conditions permit:

(b) to assure to prime contractors and subcontractors, small and large, speedy and equitable final settlement of claims under terminated war contracts, and adequate interim financing until such final settlement;

(c) to assure uniformity among Government agencies in basic policies and administration with respect to such termination settlements and interim financing;

(d) to facilitate the efficient use of materials, manpower, and facilities for war and civilian purposes by providing prime contractors and subcontractors with notice of termination of their war contracts as far in advance of the cessation of work thereunder 'as is feasible and consistent with the national security;

(e) to assure the expeditious removal from the plants of prime contractors and subcontractors of termination inventory not to be retained or sold by the contractor;

(f) to use all practicable methods compatible with the foregoing objectives to prevent improper payments and to detect and prosecute fraud.

SURVEILLANCE BY CONGRESS

SEC. 2. (a) To assist the Congress in appraising the administration of this Act and in developing such amendments or related legislation as may further be necessary to accomplish the objectives of the Act, the appropriate committees of the Senate and the House of Representatives shall study each report submitted to the Congress under this Act and shall otherwise maintain continuous surveillance of the operations of the Government agencies under the Act.

(b) In January, April, July, and October of each year, the Director shall submit to the Senate and House of Representatives a quarterly progress report on the exercise of his duties and authority under this Act, the status of contract terminations, termination settlements, and interim financing and such other pertinent information on the administration of the Act as will enable the Congress to evaluate its administration and the need for amendments and related legislation.

DEFINITIONS SEC. 3. As used in this Act

(a) The term “prime contract” means any contract, agreement, or purchase order heretofore or hereafter entered into by a contracting agency and connected with or related to the prosecution of the war; and the term "prime contractor" means any holder of one or more prime contrcats.

(b) The term "subcontract” means any contract, agreement, or purchase order heretofore or hereafter entered into to perform all or any part of the work, or to make or furnish any material to the extent that such material is required for the performance of any one or more prime contracts or of any one or more other subcontracts; and the term "subcontractor" means any holder of one or more subcontracts.

(c) The term “war contract" means a prime contract or a subcontract; and the term “war contractor" means any holder of one or more war contracts.

(d) The terms "termination," "terminate," and "terminated" refer to the termination or cancelation, in whole or in part, of work under a prime contract for the convenience or at the option of the Government (except for default of the prime contractor) or of work under a subcontract for any reason except the default of the subcontractor.

(e) The term “material” includes any article, commodity, machinery, equipment, accessory, part, component, assembly, work in process, maintenance, repair, and operating supplies, and any product of any kind.

(f) The term Government agency” means any executive department of the Government, or any administrative unit or subdivision thereof, any independent agency or any corporation owned or controlled by the United States in the executive branch of the Government, and includes any contracting agency.

(g) The term "contracting agency' means any Government agency which has been or hereafter may be authorized to make contracts pursuant to section 201 of the First War Powers Act, 1941, and includes the Reconstruction Finance Corporation and any corporation organized pursuant to the Reconstruction Finance Corporation Act (47 Stat. 5), as amended, and the Smaller War Plants Corporation.

(h) The term "termination claim" means any claim or demand by a war contractor for fair compensation for the termination of any war contract and any other claim under a terminated war contract, which regulations prescribed under this Act authorize to be asserted and settled in connection with any termination settlement.

(i) The term "interim financing" includes advance payments, partial payments, loans, discounts, advances, and commitments in connection therewith, and guaranties of loans, discounts, advances, and commitments in connection therewith and any other type of financing made in contemplation of or related to termination of war contracts.

(j) The term "Director” means the Director of Contract Settlement.

(k) The term “person" means any individual, corporation, partnership, firm, association, trust, estate, or other entity.

(1) The term "termination inventory” means any materials (including a proper part of any materials common to two or more contracts), properly allocable to a terminated war contract, except any machinery or equipment subject to a separate contract specifically governing the use or disposition thereof.

(m) The term "final and conclusive," as applied to any settlement, finding, or decision, means that such settlement, finding, or decision shall not be reopened, annulled, modified, set aside, or disregarded by any officer, employee, or agent of the United States or in any suit, action, or proceeding.

DIRECTOR OF CONTRACT SETTLEMENT

SEC. 4. (a) There is hereby established the Office of Contract Settlement which shall be headed by the Director of Contract Settlement. The Director shall be appointed by the President, by and with the advice and consent of the Senate, and shall receive compensation at the rate of $12,000 per year, and shall serve for a term of two years.

(b) In order to insure uniform and efficient administration of the provisions of this Act, the Director, subject to such provisions, by general orders or general regulations

(1) shall prescribe policies, principles, methods, procedures, and standards to govern the exercise of the authority and discretion and the performance of the duties and functions of all Government agencies under this Act; and

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