Commissioner LILIENTHAL. This relates to the question-no; we did not.

Senator MCKELLAR. Wait a minute. I want to know whether you recommended his appointment to the Commission or to anyone.

Commissioner LILIENTHAL. No, because the Commission does not recommend men for fellowships, nor grant fellowships, and this is the important part

Senator MCKELLAR. You did not select him?

Commissioner LILIENTHAL. No, sir.

Senator MCKELLAR. You had nothing to do with him, and you never recommended him at all, and you wrote no letter in his behalf. Commissioner LILIENTHAL. No.

Senator MCKELLAR. All right.

DELEGATION OF APPOINTMENT POWERS

Senator FERGUSON. Then it comes down to this problem: whether or not you have the power, under the law, to delegate to someone else the authority to grant these fellowships, and whether or not you have a right to grant them leaving out of consideration the question of security. Is that not correct? I will put the contract itself in the record. The contract itself says:

This contract is entered into under the Atomic Energy Act of 1946 in the interest of the common defense and security.

So we get right down to the question as to whether or not you had authority to enter into the contract to give someone else the authority to have people come in which would be in violation of common defense and security.

You see, this is beyond just a plain contract for education. This is a contract under law. It is a question of whether or not you have authority to delegate to some educator or someone else the use of Federal money in any way he pleases, in violation of a policy, for instance the policy that no salary or no wages shall be paid to a Communist. That is in effect what it is. Can you take this money, even though it is not for salary, in violation of stated public policy and allow Communists to use it.

I think that that is the question of the Senator from Tennessee.
Senator MCKELLAR. Precisely.

Senator CORDON. Mr. Chairman, I am trying to get some basic information here, and I want to understand this. I have the law in front of me now. I understand that up to this point there is a contract, not between the Atomic Energy Commission and an individual for a fellowship, but between the Atomic Energy Commission and an organization, which organization is to do something for the Atomic Energy Commission and through it for the people, under the law.

Might we know what is in the contract before we go any further?

CONTRACTUAL AUTHORITY OF THE AEC

Commissioner LILIENTHAL. This is what I was trying to stateSenator CORDON. Could we have the agreement that they have, under which this thing happened as a result?

Senator O'MAHONEY. Before the Senator came in, the Chair pointed out that the statute does give the Atomic Energy Commission

the right to make certain contracts. Some of these contracts are for the construction and operation of atomic energy plants in every field; and others, as provided in section 3, are for the promotion of research. So that the Commission has explicit authority to make such contracts with an organization such as the National Academy of Sciences and the National Research Council.

But the Chair pointed out, after reading the specific provisions of the Atomic Energy Act with respect to security and the provisions of section 102 with respect to the Utilization of appropriations, that the policy of Congress was twofold: First, to prevent access to restricted data, to secret data; and secondly, to prevent infiltration by Communists into the Government of the United States or into any of its agencies, and not to use any money of the United States to aid such infiltration.

Now, the contract here was signed with the National Academy of Sciences before any fellows were appointed, and the evidence before the committee which was presented before we had the hearings all indicated that the Atomic Energy Commission only provided the money, and was not concerned with the selection of the individuals.

When Dr. Bronk comes on the stand, he will assume, I would imagine, the responsibility for the selection of these individuals, and whether or not, as Senator Ferguson has just stated in his question, the Research Council or any other contract for the promotion of science should not exercise every single one of the precautions described by Congress in the appropriation bills and in the Atomic Energy Act to prevent this infiltration.

Senator CORDON. The reason I asked for knowledge of the contract itself, if I remember my hornbook law, this is the law: that into every contract is written the law that authorizes the contract and all other law applicable to it. That is a part of the contract.

Senator OMAHONEY. That is without any question. Senator Ferguson has a copy of the contract.

Senator FERGUSON. The next question I would like to ask the Chairman of the Commission is this: Whether or not it does not involve the question as to whether or not the Commission can delegate to someone else a discretion to see that the money is used according to the broad policy of Congress. That is the problem that is indicated: Whether or not they can say to a scientific board, "Now, we wash our hands of it," as an answer to Senator McKellar that the Commission did not approve this man, whether or not you can delegate such authority. Senator WHERRY. I think if the witness could be allowed to proceed, we could get this procedure, and then we could interrogate him as to whether or not that procedure does conflict with this basic law. Senator O'MAHONEY. You have your opportunity.

PROCEDURE IN SELECTION OF FELLOWS

Commissioner LILIENTHAL. Let me state what the procedure is, and then come to the question of whether there is legal authority, and then the question of the wisdom.

We were confronted with this proposition: Assuming a fellowship program in the nonsecret field, for the purposes suggested to us by strong endorsement of the scientific community of the United States; how is the best way to operate such a fellowship?

There were a number of courses open. One of them would have been the direct selection of fellows. This, to me, is the most abhorrent kind of thing. I am profoundly distrustful of the Federal Government getting into any such direction. My colleagues share this feeling.

There happened to be an alternative, and what seemed to us a very good alternative and a sound precedent for the future, to wit, to appeal to that organization in the United States which, chartered under President Lincoln and functioning in a field of fellowship selection since the days of Woodrow Wilson, has made an excellent record in the business of selecting fellows. This is the National Research Council, an agency of the National Academy of Sciences. That organization

Senator WHERRY. Give that name again.

FUNCTION OF THE NATIONAL RESEARCH COUNCIL IN THE PAST

Commissioner LILIENTHAL. The National Research Council. It is a private organization, but it is chartered under a Federal charter; and it is, by this Federal charter, an adviser to the Government. This seemed the appropriate first step.

If I may continue that, I would like to say that this organization had extensive experience in this field. They had fellowship boards already set up through the country, and there was a grass-roots, decentralized approach to the question of selections because these boards were set up in the various areas of the country. We asked them if they would administer the funds under this program.

The question of how far we should reach over their shoulder and take away their discretionary authority was the very threshold of this question. Our feeling was that since this was a precedent of such great importance, that they should select the fellows by the standards which they have developed in the past 30 years, and which have resulted in the selection of such great scientific talents as E. O. Lawrence, J. Robert Oppenheimer, Dr. Robert F. Backer, Henry D. Smyth and I could enumerate the list.

So that they are a going concern with a good record of dividends. Here is

PREVIOUS RESEARCH COUNCIL SELECTIONS WERE FOR PRIVATE GRANTS

Senator SALTONSTALL. I do not want to interrupt, Mr. Lilienthal, but not with Federal money did any of these men get their education or were any of these selections made, is that correct?

Commissioner LILIENTHAL. It was not with Federal funds.
Senator SALTONSTALL. You emphasize that.

Commisisoner LILIENTHAL. It is with private funds.

Now, the reason, however, this seemed an appropriate organization, the reason it seemed doubly important to get some insulation between the Federal bureaucracy and the students and universities, was because Federal funds were involved. And I want to suggest that if we begin the process of tying strings to Federal funds for education, the end of it no man can see. And this, therefore, would be an important beginning. We ought to be careful.

Now, we believed that we had authority to enter into an arrangement with this organization and say, "You use the criterion and the standards of selection you have used in the past, and pick these fellows"; and this is what has been done.

Now, obviously these criteria would need development. I would like an opportunity to complete this

Senator WHERRY. What kind of an agreement did you enter into?

CONTRACT WITH THE RESEARCH COUNCIL

Senator FERGUSON. Might I make the contract a part of the record? Senator O'MAHONEY. I was about to do that.

(The contract is as follows:)

CONTRACT No. AT-49-1-GEN-150-MODIFICATION No. 1

NATIONAL RESEARCH COUNCIL,

NATIONAL ACADEMY OF SCIENCE,

Washington, D. C.

MARCH 22, 1949.

GENTLEMEN: The above-numbered contract is amended by substituting for the last sentence of article III (a) (4) the following sentence: "The total amount of expenditures under this contract for which the Contractor shall be entitled to reimbursement shall not exceed $2,850,000, to be a charge upon such obligational authority as the Commission may designate;" and by substituting in line 2 of article II (a) the date "June 30, 1952" for the date "June 30, 1950."

Accepted.

UNITED STATES OF AMERICA,
By CARROLL L. WILSON,

General Manager, United States Atomic Energy Commission.

NATIONAL ACADEMY OF SCIENCES IN BEHALF
OF NATIONAL RESEARCH COUNCIL,

By

CONTRACT No. AT-49-1-GEN-150

THIS CONTRACT, entered into the 18th day of August, 1948, effective as of January 1, 1948, by the United States of America, represented by the United States Atomic Energy Commission (hereinafter called the Commission) and the National Academy of Sciences (hereinafter called the Contractor), a nonprofit organization organized under an act of Congress of March 3, 1863, 12 Stat. 806, having its principal office at 2101 Constitution Avcenue, Washington 25, D. C. WITNESSETH THAT:

Whereas a letter contract effective as of January 1, 1948, which is hereby superseded, was entered into between the Commission and the Contractor, in which it was agreed that negotiations should be undertaken for the execution of a definitive contract; and

Whereas this contract is entered into under the Atomic Energy Act of 1946 in the interest of the common defense and security.

NOW THEREFORE, the parties hereto mutually agree as follows:

ARTICLE I. SCOPE OF WORK

In accordance with policies and programs from time to time agreed upon by the Commission and the Contractor (including the qualifications and methods of selection of Fellows, the general fields of work to be performed by the Fellows, the amount of fellowship stipends, and other conditions of fellowship awards), the Contractor shall:

(a) Establish and administer a Research Fellowship program in the physical sciences related to atomic energy;

(b) Establish and administer a Research and Training Fellowship program in the medical and biological sciences related to atomic energy,

ARTICLE II. TERM OF WORK

(a) The term of this contract shall begin on January 1, 1948, and continue through June 30, 1950, and may thereafter be extended as agreed upon by the Commission and the Contractor. The Commission, by written notice, may terminate the contract in whole or in part at any time.

ARTICLE III. REIMBURSEMENT FOR COSTS

(a) The Government shall reimburse the Contractor for all direct and indirect costs, determined in accordance with generally accepted accounting principles consistently applied, which are actually incurred by the Contractor in performing the work under this Contract. These costs shall include the following:

(1) stipends to Fellows and expenses of Fellows reimbursed by the Contractor; (2) overhead and expenditures for salaries, wages, subsistence or per diem in lieu thereof, services, supplies, taxes, premiums for such bonds or insurance as the Commission may require or approve, transportation and communication, equipment and apparatus, and any other cost which the Commission may approve or ratify;

(3) In the event that this contract is terminated by the Commission, the costs resulting from or attributable to the termination;

(4) any other costs and expenses not otherwise reimbursed, which are actually incurred by the Contractor in good faith arising out of or connected with the work under this contract. Any cost or expense actually incurred and claimed by the Contractor under this paragraph (a) (4) of article III shall be reimbursed by the Government unless the Commission shall establish that such cost or expense resulted from wilful misconduct or bad faith on the part of some corporate officer or officers of the Contractor, or on the part of a person having general supervision over the work carried on under this contract. Any dispute as to whether such an item is reimbursable shall be determined pursuant to article VII, disputes, which determination shall be binding on the Contractor and the Government. The total amount of expenditures under this contract for which the Contractor shall be entitled to reimbursement shall not exceed $1,177,200.00, to be a charge upon such obligational authority as the Commission may designate.

(b) Reimbursement under the foregoing provisions shall be without duplication of any items.

(c) Any revenues received by the Contractor in connection with work under this contract shall be accounted for by the Contractor and applied by the Contractor in reduction of the cost of work under the contract.

ARTICLE IV. PARTIAL AND ADVANCE PAYMENTS

(a) Partial and advance payments on account of costs including overhead may be made by the Commission upon application of the Contractor. Advances shall be deposited only with banks which are members of the Federal Reserve System or other banks which are approved by the Commission.

(b) At such intervals as shall be mutually agreed upon, but not less often than once a year, the Commission, in consultation with the Contractor, shall review in accordance with generally accepted accounting principles consistently applied the amount of costs including overhead actually incurred by the Contractor in the performance of the work during the preceding interval. Any excess of payments on account of costs above actual costs including overhead for the same period shall be applied by the Contractor in reduction of the cost of work under this contract or, if the Commission so directs, refunded promptly to the Government. Any deficit in payments to the Contractor shall be paid promptly to the Contractor by the Government.

ARTICLE V. TITLE TO AND DISPOSITION OF PROPERTY

(a) Except as otherwise directed by the Commission, title to all property acquired by the Contractor, for which the Contractor shall be reimbursed or entitled to reimbursement under this contract, which is not expended in the course of performing the contract, shall vest in the Government when title passes from the vendor.

(b) The Contractor shall not be liable for the loss or destruction of or damage to such property unless the Commission shall establish that such loss, destruction, or damage resulted from the wilful misconduct or bad faith of a corporate officer