Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-13
BILL INTRODUCED
FOR BUILDING i. s.
PAPER MILL HERE
Chairman Wood of House Ap-
preparations Committee
Sees Big Economy.
WOULD PRODUCE
STOCK FOR MONEY
Plant Adjacent to Engraving Blu
reau Would Protect Secret
Process, He Says.

mOuOpOly QelQ py one paper Inanu-
featuring concern that has furnished
distinctive paper for United States Sc
eurities for more than so years, Chair
man Wood of the House appropriations
committee introduced late yesterday a
bill authorizing the erection of a mill
hon-dollar paper mill adjacent to the
Bureau of Engraving and Printing, to
be owned and operated by the Federal
Government. He claims that such a
plant would pay for itself in four years
This action was taken by Chairman
Wood after he had received a report on
which the Bureau Of Efficiency has been
working for five years with the cooper
alton of the Bureau Of Engraving and
Printing, the Bureau of Standards, the
Secret Service and private manufactur-
ers. This report shows that the con-
tractor supplying the distinctive" pa
Of the Government, that he submits bids
which exact penalties Of from $4,000
to $l44, 200 II any other manufacturer
II given any of the 1900 tons required
annually by the Government, that q
saving Is possible Of from $4,000 to
$500 In express charges, and that
under the system of competitive bid
ding 1t is impossible for the Govern
ment to have any secret processes for
Change for Improvement.
Chairman Wood emphasizes that
tests made both by the Bureau OF
Standards and by private manufac-
turer prove that mo difficulty should
be encountered in producing currency
paper from three to five times as
been furnishing"
Emphasizing that he Is entirely I'M
sympathetic with any proposal to put
the Government into competition with
private industry, Mr.. Wood pointed out
that "the paper for our currency is
entirely different and Is not used COM
mercially. In fact" he stressed, "the
manufacture Of paper having any OF
the distinctive features prescribed In
our currency is forbidden by statute
which carries heavy penalties for its
manufacture for any other person or
institution than the Federal Govern
ment."
Chairman Wood is prepared to make
o speech In the House, today If pos
sible, disclosing the findings of the
Bureau Of Efficiency. Explaining the
penalty" bids, he viii say, In effect
that when invitations for bids were
issued recently for paper for the fiscal
year ending June 80, 1891, the Treas
ury Department requested bids on the
same basis as those for 1880, but spe-
~'dcally reserved the right to divide
the award between the two lowest bid
ders. The contractor who has had this
contract for more than half century
submitted q bid of a cents pound
II permitted to furnish the entire re-
quirements Of the Treasury; Of 40 cents
O pound II permitted to furnish the
entire requirements less 200 tons, and
OF 51h cents pound II permitted to
furnish the entire requirements less
400 tons. The second and only other
bidder was the manufacturer who Is
sharing the contract for 1880. ne
offered to furnish either 200 or 400
tons at fat price Of At cents pound.
"Obyious Penalty Bid"
"The bid of A cents a pound is OBJ
viously a penalty bid designed to kill
competition" emphasized Chairman
Wood. land If accepted, no prediction
eminent will suffer in the matter OF
price and quality. The penalty will be
substantial II we may judge the future
By the past. It IS certain that the
contractor will not deliver paper as de.
sired, and this will be very detrimental
to the Governments interest.
1.-THE contract price for similar paper
for the fiscal years 1925, 1925 and 1927
was 49as cents q pound. On the other
hand, II the Government adheres to the
policy Of awarding the contract 70 more
than one bidder, 1t is confronted with
the necessity next year OF paying
penalty of $4,000 If 1t awards 20t
tons to the second bidder or penalty
of sl44, 900 If it awards 400 tons TO the
second bidder. Certainly, If the seconc
bidders interest is not continued by. CIV
ing him a fair share OF the CUISINES!
for 1881 on the basis of the fair anc
reasonable bid he has submitted, 1t !!
doubtful If a competitive bidder Will ot
found for this business in the future.
Assuming that the cost OF productlor
Of this paper Is 40 cents pound, tnt
contractor, II given the entire contrac
for ZOO tons, would make profit o.
$40 q ton, or see, 900. If, on the Other
hand. he were given the contract for only
1000 tons Il 200 tons less 200 tonsl a.
40 cents O pound his profits would Of
$3.50 a ton, or $4,000, and If giver
the contract for only 800 tons Q.20l
less 400 tons) at 511a cents pound
600. In other words, If the Govern
ment undertakes to protect itself b.
dividing this business, the larger con
tractor proposes to exact an addltlona
profit of $4,000 ($l80.000 less $96 900
II 200 tons are given to another bldder
Or an additional prOnC OF Soo,UuU lSAo1'
600 less $96,o00) II 400 tons are given u
another bidder, Notwithstanding the fac
that the quantity he would be required
to manufacture would be reduced one
sixth or one-third. In the event thu
bidder Is awarded less than the entir
amount, his profit will be augmented
of course, by whatever he may max
through the manufacture Of paper 10
commercial use during the period tina
one machine Is not required Tor Tn
manufacture Of Government paper be
cause of the reduced amount"
THE development of secret processe
for further protection against 1uege
manufacture Is not feasible when tn
Government is required annually to ad
yertise its specifications and to rely upo
n private contractor to carry on tn
manufacturing operations" said M
Wood.
"The records show that the Treasur
Department paid IN express charges fo
the transportation of currency pape
from the manufacturers mills to Wash
ington $50, 1872 SO in the fiscal year 1926
Se8,049.79 In the fiscal year 1927; $87
237.55 In the fiscal year 1928, and SIS
O8673 In the fiscal year 1929. The est
mated express charges on 1900 tons fc
the fiscal year 1881 are $66 1000. If
mill Is located in the District Of Colum
bia adjacent to the Bureau Of Engra,
ing and Printing this 900 for expires
would be entirely eliminated and In ac
dition substantial amount for sue
itsenS rs packing cases, duplicate count
ETC.. would be saved.