The Bridgeport times and evening farmer., 1918-12-20
HOG ISLAND PLANT AFFAIRS AIRED IN OFFICIAL FINDING
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plant would be completed in Septem- | Der; that the contract substantially 1 was being compiled with and that the | controversy hinged mot so much up- l on the question of accomplishment but upon means, methods and expendi- tures." But attached is a letter from the investigators, dated Sept. 21, which the attorney general transmit ted to the president, referring to press reports that the program Is falling behind schedule and calling attention to the fact that the report was based upon conditions as they appeared early in July.
 General Manager Piez, of the Emergency Fleet Corporation, ap- bearing yesterday before the Senate commerce committee, testified that the Hog Island yard would be com plete in about sixty days; that the cost would be about $63,300,000 and that the plant had delivered one ship and laid fifty keels.
 The Department of Justice investi- gation was made by two assistants to the attorney general-G. Carroll Todd and Mark Hyman-beginnin last February when President Wilson ask ed -he attorney general to get into consultation with Chairman Hurley of the Shipping Board about the whole matter with a view to instituting crim- tnal process in case the facts justify it." Charges of graft and gross waste had been made in an inquiry conduct ed by the senate commerce commit tee.
 The report describes at the outset the contract entered into by the Emergency Fleet Corporation on Sep tember IS, 1917, under which the American International Corporation of New York agreed to purchase 846 acres of land at Hog Island to be uti- lized for the purpose of the contract upon a six per cent rental basis; to build on this tract with funds fur nished by the Emergency Fleet Cor poration shipyard of fifty ways, and to construct with funds supplied from the same source fifty or more steel cargo ships at an estimated cost of S1,100,000 each. On Oct. 23 the Fleet Corporation placed an order for sev- enty additional steel ships, estimated to cost $1,650,000 each, and on May 2, an order for sixty more ships to cost $1,425, 900 each. All of the 180 ships were to be completed by Aug. 4, 1919. These orders necessitated construction of longer ways and piers, and more shop and storage capacity
 The contracting company's compen- sation for building both the yard and the ships was fixed at a percentage of the estimated cost of the ships, with premiums for early deliveries or saw ings in cost and penalties for delayed deliveries or increased cost. The maximum fee under this arrangement would be $14,44O,OO and the mini mum fee $S,91o,0O0. MT. Piez testi- fled yesterday that to date the com pany had been paid nothing.
 This is the conclusion as to criminal liability:
 "In response to the question sub mitted by the President, our conclu- sion is that the facts do not justify criminal process; that no fraud or se- cret profits on the part of the officials of either the agent or the fleet cor poration has been established; that while there were some minor frauds on the payroll, which have been pros ecuted, the laborers, laborers' time keepers and payroll supervisors were in the main honest"
 Stating conclusions as to alleged waste and mismanagement, the report proceeds:
 "Waiving all minor questions of controversy, the outstanding fact is that the agents summer and fall esti- mates of $21,00O,0OO and it's Novem- Der 27 estimate of $27,000,O0O have e, ble cost of the yard will be about $61, 100000 dncMding $6,0oO,OOo for recent additions made by order of the fleet corporation). Such a discrep- ancy must be due to some fundamen- tai miscalculation in the original es- innate, to supervening condition, in cluding enlargement of the plant, to mismanagement in operation, or to a combination of these factors. A dis crepancy of such magnitude would seem to call for clear explanation from the agent, but this has not been furnished.
 Considerable effort has been made by the agent in the hearings to stul- fly its own estimates by claiming that they were mere guesses that nobody
 
 poration did rely on them; and there is no contemporaneous evidence jus tifying the agents present position.
 'The most significant single fact in- dicating the point of view at Hog Is- land was that bills for material large ly lumber, were prepaid (and properly prepa1O to the extent of $10 900, but no effort was made by the agent !
 whether prepaid bills were in fact fol- lowed by actual receipt of the mate rial paid for.
 Another fact of strong significance is that while the contract provided in express terms that the agent should keep a detailed plant cost account and contained very careful provisions defining cost, yet the agent at an early date took the position that since the government paid for everything that went into Hog Island it was un- necessary to comply with this pro- vision. Hence, at no stage of the work since last December could 1t be determined what any unit of plant construction cost"
 A report of the naval technical ad- visers included in the report says so far as the date before them shows. the general scope of the Hog Island plant has net changed very mate riaily since the November estimate of cost, and that the difference between S27, 600 600 and s55, ,665. .60N cannot be ac- counted for by expens.on subsequent to November 27. The total oost of about S1190,000 per slip at Hog Island is compared with S69s, GOO for the sim 1laF yard at Bristol, and $3e6 06O at Newark Bay.