The Waterbury Democrat., 1941-04-26

work request for information on these jobs, and as replies come in, they will be analysed to sec how they look from the governments point of view. If profits or costs look out of line, they will be examined further. Department of Justice ac- tion for the recovery of excessive fees is the ultimate possibility. LONG
 LITIGATION
 There is still one case kicking around in court in which the gov- ernment Is seeking to recover what 1t considers excessive profit made on a last war contract. It is an ac- tion now before the Supreme Court in which the government asks modi- fication of war contracts made with the Bethlehem Steel Corporation in 19l7-l8 for ship building, The action is review of two cases, one in which the corporation seeks to re- cover s7.5 million profits not yet paid, the other in which the govern- ment charges that Bethlehem sub- mitted inflated cost estimates, with the result 1t would receive $25 mill lion profit for doing a $93 million job.
 Today, according to latest tabu- lations of the army and navy, the fixed fee contracts number more than 300 with an estimated value of about g billion. Total number of contracts let Is nearly a million with a value of $l2 billion. The army has let about three-fourths of these.
 Most of the contracts awarded on the fixed fee basis are for construc- ton.
 Navy contracts include projects like the new bases at Newfoundland and Bermuda. Army contracts in- clude most of the cantonments, powder mills and bomber plants.
 That there will be comparative ly little dirt uncovered by the investigation of the defense effort seems relatively certain. There will be some bad jobs and that's inevitable in a program as big as the present one, but the protiteer- ing mistakes of the last war made good lessons for this one, and as MT. Knudsen told the Truman committee the other day, there has been none of the shopping around" with contracts this time. Last war, 1t was the custom for one contractor to hog all the jobs he could, then sublet them and collect @ commission which was considered a part of the cost.
 PROFITS
 UNMENTIONED
 At the start of the defense of. fort, there was congressional action intended to limit profits to l2 per cent, later reduced to 8 per cent. When 1t was found however, that this limitation made 1t impossible to get sub-contracts, the rules were changed so that the mention of all percentages was eliminated. 1n- stead, contract provisions stated that jobs were to be done at cost plus @ stated flat fee, which was computed at a low percentage of the estimated cost.
 O. I. o. economists have been making much of the concentration of contracts in the hands of a few of the big companies, stating that 90 concerns have received 85 per cent of the contracts So far issued, and claiming that Bethlehem and DuPont groups got 23 per cent of the total. This computation, how ever, puts all the General Motors contracts In the DuPont group.
 Furthermore, this picture Is a little warped because tabulations are based on primary contracts, which are the only ones army and navy are interested in. Any one of these primary contractors may get parts from numerous inde- pendents. As a matter of fact, the North American bomber was laid out in 32 sections, each rating Q sub-contract, and the Boeing 3l7 bomber had 532 ub-contractors making parts. ..
 As to the specific information which the Truman investigators have asked fixed fee contractors to supply for study, that's a large order: Annual financial state- ments for the last five years. Equip ment purchased, borrowed or leased to carry out the job. Names of sub- contractors and officials, and their connections with the Government, if any. Commissions paid agents who may have helped obtain contracts, and their identity and connections, Lists of materials used and speci-. fications. Any information as to any improper action. 1
 Summer has come unusually early in Washington this year, and the