Evening star., 1942-04-04
alternative Plans
To Curb Profits Drawn
For Senate Group
Subcommittee Orders
Droft Of Sliding Scale
And Renegotiotion
BY ]. A. O'LEARY.

The Senate Appropriations Com
mittee will decide today whether
Congress should attempt to fix per-
centage limits on war contracts or
:lothe Government departments with
broad power to prevent evcess profits
by negotiation.
When the subcommittee handling
the nearly $4,000, 100000 supple
mental war appropriation bill I'm
;shed work on the measure last
night, 1t turned over to the legisla-
tive drafting experts alternative
plans for curbing profits with in
structions to work out combination
of the two for presentation to the
full committee this morning.
One plan, drafted by Senator
Thomas. Democrat, Of Oklahoma,
proposed to substitute for the fiat 6
per cent limit voted by the House
on all contracts, sliding scale OF
percentages, based on the size OF
the contract, as follows:
On all contracts up to 100000, 10
per cent; from $100,000 to $500 900, 8
per cent; over $500 900 and up to ST.
10000, 6 per cent: over $1,000, 900 and
up to $5,000,00o, 5 per cent; over S.
100000 and up to $4,000, 900, per
cent; over $4,000 900 up to $50 0.000,-
600, 3 per cent; on contracts above
that level, 8 per cent on the flrst
s5o,oooooo and 2 per cent on the re-
mainder.
Other Provides Renegotiation.
The other plan. presented by Sen
ators Overton Of Louisiana and
OMahoney of Wyoming, both DEM
ocrats, sought to avoid fixed per-
centages, but to vest in the heads
of the agencies buying war supplies
the power to write into every con-
tract a provision for renegotiation
as soon as the profits can be deter
mined with reasonable certainty.
The Government would have power
to withhold any part Of the con-
tract price deemed to represent ex-
cess profits, or to sue In the appro-
pirate courts to recover If payments
already made are deemed to repre-
sent excessive profits. This plan
would apply to past as well as
future contracts, provided final pay
ment has not been made. Provisions
also were added to prevent pay
ment by contractors of unreasonable
bonuses and salaries.
Senator Thomas embodied these
general powers in his plan, but
added the sliding scale Of fixed per-
centages.
When the subcommittee adjourn
ed its executive session late yester-
day, some members indicated 1t
had approved in principle both the
sliding percentage plan and the
general negotiation plan, subject to
redrafting overnight. Other sub
committee members gave the i'm
preston, however, that the entire
question Of profit limitation had
been left for settlement by the full
committee today. q
Bill May Delay Recess.
Senate leaders had hoped to pass
the big war supply bill today and
start a two-weeks informal recess,
but the injection of the profit
control question into the war supply
bill by the House created an issue
that may keep the Senate working
on the bill sevaral days next week.
The House is already in technical
recess until April IS, and any sub
stitute profits plan the Senate
adopts will have to be threshed out
finally In conference between the
two branches.
Some members Of the Senate Ap-
preparations Committee are con-
vinced that it is impractical for
Congress to attempt to write into
law fixed percentage limits on prof
Its that will not lead to inequities |
They are confronted, however, by |
reports that the fiat 6 per cent
limit adopted in the House struck a |
popular chord back home, despite |
the fact that per cent on a large |
contract may prove excessive, while |
2 or per cent on a small contract |
might be inadequate and discourage |
production.
Principle Held Likely.
1t is not likely, therefore, that the
Senate will attempt to strike out |
the per cent House limitation with
out writing in some alternative.
Adoption by both Houses of a
curb on profits also is likely to spur
the members of both Houses who
are advocating repeal of the 40
hour week and other changes in
labor legislation as war step.
To show the diffculty of applying
fixed percentage limits on profits,
Senator Overton pointed out today
that a company building battle
ship may have its margin Of profit
on given contract spread over four
or five years, while another company
making cartridges may complete one
such contract in a few months, so
that in year it would handle sew
eral contracts. i