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SECOND DEFICIENCY APPROPRIATION BILL, 1949

WEDNESDAY, MAY 11, 1949

UNITED STATES SENATE,

SUCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D. C.

The subcommittee met at 10 a. m., pursuant to recess, in room F-39,
the Capitol, Hon. Kenneth McKellar (chairman) presiding.
Present: Senators McKellar, Ellender, McClellan, Gurney, and
Cordon.

The CHAIRMAN. We will come to order, gentlemen.
We will hear you now, Senator Saltonstall.

TREASURY DEPARTMENT

COAST GUARD

STATEMENT OF HON. LEVERETT SALTONSTALL, A UNITED STATES SENATOR FROM THE STATE OF MASSACHUSETTS

REPAIR OF SHIP "EAST WIND" IN BOSTON NAVY YARD

GENERAL STATEMENT

you

Senator SALTON STALL. Mr. Chairman, it is very courteous of to allow me the opportunity of appearing before you at this time. I will not delay these gentlemen more than 30 seconds.

There is a language change somewhere in the second deficiency bill that will permit the East Wind, which was damaged in a collision with an oil tanker off New York Harbor, to be repaired in the Boston Navy Yard.

President Truman has sent a letter recommending that language change.

It does not require any money.

EMPLOYMENT PROBLEM AT BOSTON NAVY YARD

The Boston naval shipyard has been advised that approximately 1,700 employees will have to be laid off.

Senator CORDON. I take it that the Senator does not object to having the work done there; is that right?

The CHAIRMAN. You do not object to having it done there; do you? Senator SALTONSTALL. No, sir.

The CHAIRMAN. Thank you, Senator Saltonstall.

The CHAIRMAN. We will now resume with the Federal Works

Agency.

90561-49

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FEDERAL WORKS AGENCY

OFFICE OF THE ADMINISTRATOR

STATEMENTS OF JOSEPH GUANDOLO, SOLICITOR, BFC-Resumed; ACCOMPANIED BY DONALD E. A. CAMERON, DIRECTOR OF BUDGET AND REPORTS, FWA; WILLIAM C. DENNY, DIRECTOR OF FINANCE DIVISION, BFC

CONSERVATION OF SECURITIES

RESUMPTION OF DISCUSSION OF PROGRAM

Senator CORDON. Might I ask one or two questions, Mr. Chairman? The CHAIRMAN. Yes.

Senator CORDON. I think that when we recessed Monday, we were discussing the amount of funds provided by the suggested language, to be made available to Federal Works Agency for the purposes in question for the balance of this fiscal year and the whole of the coming fiscal year.

Is that correct?

AMOUNT REQUESTED

Mr. GUANDOLO. That is right, sir; and that amount was $68,000. Senator CORDON. I believe that one witness had just made the statement that the reason why the language was requested in this bill was to allow it to become applicable upon the passage of this act rather to have it in the 1950 regular bill and become effective on the first day of July.

It was indicated that that was a necessity for some immediate action, particularly with reference to securities held on power districts in Nebraska.

Mr. GUANDOLO. Three of them, sir, in Nebraska, and also two others. Senator CORDON. I understand there were five of them.

Mr. GUANDOLO. That is right; five in all.

Senator CORDON. I was thinking of the immediate necessity. Mr. GUANDOLO. The immediate necessity arises with all five of them, as a matter of fact, Senator Cordon.

REQUESTS FOR PERMISSION TO ISSUE BONDS

Last fall we received requests from all five districts to grant our permission for their issuance of additional bonds for the incurring of additional obligations through private sources, which would be on a parity with the bonds held by the Government.

We realize that in order to make an examination of these five projects, into the financial aspects and engineering aspects and legal aspects of these five projects, as a basis for either granting or denying those requests, that it would involve a considerable amount of work.

So we went to the Budget Bureau in January with this request and, unfortunately, the appropriation bill has been delayed until now. Senator CORDON. Evidently the Bureau of the Budget did not agree with you that there was any real emergency.

Mr. GUANDOLO. No; they did agree.

As a matter of fact, the Bureau of the Budget determined to put it in a deficiency bill rather than in the regular appropriation bill, because the Bureau recognized the emergency character of this request.

Senator CORDON. Did the Bureau of the Budget recommend it?
Mr. GUANDOLO. Yes; they recommended the $68,000.

Senator CORDON. That went to the House; did it not?
Mr. GUANDOLO. That is correct.

HOUSE COMMENT

Senator CORDON. The House has some reference to it in the House Report; does it not? What did the House have to say about that? Mr. GUANDOLO. I do not recall now just what the determination of the House was on that.

Senator CORDON. The House said:

The request for the authority of servicing of securities for the appropriation of $68,000 of conservational securities is omitted from the accompanying bill, for the reason that both items are presently under consideration in connection with the regular appropriation for the fiscal year 1950.

Mr. GUANDOLO. That is not correct, Senator.

Senator CORDON. Then there appears this statement in the House report:

The committee feels that whatever action is initiated in this connection should be contained in the regular annual bill for this agency.

Mr. GUANDOLO. The first conclusion of the House, I respectfully suggest, is not correct, because this was not included in the independent offices for fiscal 1950, the $68,000.

The CHAIRMAN. Is there no estimate for it in that bill?

Mr. GUANDOLO. No estimate at all in that bill.

Senator CORDON. Of course, the House might of its own motion have transferred the item over for consideration. Do you know whether it has given such consideration?

Mr. GUANDOLO. It is not included in the bill.

The CHAIRMAN. You are saying that it is not in the regular bill? Mr. GUANDOLO. No; it is not, sir.

The CHAIRMAN. Are there any further questions?

Senator CORDON. Yes, sir. I want to ask some questions about how much money they need from now until the first of the next fiscal year. Mr. GUANDOLO. I think that that will be very difficult to estimate, Senator Cordon. You see, the work involved, particularly the trust indenture work, is a continuing operation. Once you get into it you have to continue that until the trust indentures are completed, new refunding bonds are accepted in exchange for the bonds presently held.

The other aspect of the problem, of going into the regular engineering inspection and review of rate ordnances and review of income sheets and balance sheets, and so forth, I think that aspect of it can be broken down on a fiscal year basis.

Senator CORDON. I am asking these questions, frankly, to assist you people to the greatest extent I can. I believe that, if I were a member of the House committee and I had taken the position such as the committee has indicated it has taken, I would probably not

look too kindly toward putting the item back into the bill, particularly if we are to give any validity whatever to the statement in the House to the effect that they are considering it in the regular bill.

I assume they are; or, at least, if they are not, we ought to know that from them.

Otherwise, we can very well put the item in and you still would not have it when the time comes to pass it.

Mr. GUAND 10. Yes. I understand that. Senator.

I presume that we could give you some break-down that would indicate what the expenditures would be up to and including June 30. Senator CORDON. Will you do that and present it for the record here, so that we will have it by the time we reach executive session? Mr. GUANDOLO. Certainly.

(The information requested, subsequently furnished, is as follows:) The estimate of $68,000 for "Conservation of securities" is broken down by fiscal years as follows: 1949, $8,000: 1950, $60,000.

The CHAIRMAN. Are there any other questions, gentlemen?
We are very much obliged to you gentlemen.

PUBLIC BUILDINGS ADMINISTRATION

STATEMENT OF W. E. REYNOLDS, COMMISSIONER OF PUBLIC BUILDINGS, ACCOMPANIED BY H. G. HUNTER, ASSISTANT COMMISSIONER OF PUBLIC BUILDINGS; J. E. STRAWSER, BUDGET OFFICER, PBA; AND D. E. A. CAMERON, DIRECTOR OF BUDGET AND REPORTS, FWA

FEDERAL OFFICE BUILDING, NASHVILLE, TENN.

LANGUAGE IN HOUSE BILL

The CHAIRMAN. We will now hear from the Public Buildings Administration.

On page 6 of the bill the following language appears in connection with the item of Federal Office Building at Nashville, Tenn.:

In addition to the appropriation provided for under this head in the First Deficiency Appropriation Act, 1946, the Federal Works Administrator is authorized to enter into contracts for the purposes of said appropriation in an amount not exceeding $1,200,000.

Then, under the item "Sites and planning," certain public buildings outside the District of Columbia, the following appears:

For an additional amount for the acquisition of sites for public buildings, as authorized by the acts of March 25, 1948 (Public Laws 455, 456, and 457), $150,000, to remain available until June 30, 1950.

Can you tell us about that, Mr. Reynolds?

DEFICIENCY AMOUNT ALLOWED IN 1946

Mr. REYNOLDS. The first item is for additional contract authority to construct a building at Nashville, Tenn. The First Deficiency Appropriation Act of 1946 appropriated $5,575,000 for this project.

INCREASED COST REQUIRES ADDITIONAL AUTHORITY

We had some difficulty in acquiring a site in Nashville, and we then proceeded with the drawing of specifications. In the meanwhile, costs rose approximately 46 percent which, based upon the original estimate, would require $2,564,000.

We were very careful, in preparing these drawings, to get a building which was efficient, but extremely economical. On the basis of bids just recently received, which were very encouraging, we require an additional contract authority of $1,200,000 in order to award a contract on bids now before us.

Senator ELLENDER. What is the building going to be used for?

Mr. REYNOLDS. It is a general office building and courts. In Nashville we have a post office and old courts building, and they are just a block apart. We are buying the intervening block so that it will give us three Federal buildings in a row and concentrate all Federal activities in Nashville in one location.

ESTIMATED COST OF PROJECT

Senator ELLENDER. What is the estimated cost of the entire project? Mr. REYNOLDS. It is $6,775,000.

Senator ELLENDER. Has any of that been appropriated?

Mr. REYNOLDS. $5,575,000. We do not need cash now, but we do need contract authority so that we could enter into a contract with bids that we have now received.

COMPARISON OF BIDS WITH OTHER PROJECTS

Senator ELLENDER. How do the bids compare with others you have received, on similar projects?

Mr. REYNOLDS. The bids are very favorable. You know, Senator, that we have not done much permanent work for 10 years. But we have been watching the market, and our views are that the market reached a peak about in November of last year, althought it was not recognized at that time. Then it stabilized and started dropping off slightly. That was reflected in the bids in the General Accounting Office Building here in Washington and just recently the bids on the courts building, which was substantially below our original estimates on that project.

Senator ELLENDER. Percentagewise, how much lower would you say it was?

Mr. REYNOLDS. I would say that we must have received at least 15 percent below what we would have gotten along in October. That is a guess, of course, but the competition now is extremely keen and the bids are very, very close. We received bids yesterday on a project running about a million dollars, and the difference between the low bids is only 6,800.

On the Federal Courts Building the bids on the escalators are only $8 apart, on $49,000 worth of escalators. Also, on our repair work throughout the United States, we are getting a great number of bids whereas year and a half ago we would get only one or two or three, and sometimes none.

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