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of the increase of work; such as the number of pieces of work handled, or in whatever way you can make the comparison?

Mr. BAITY. No, sir; but in our hearings before the Budget that was discussed quite a bit and figures were given.

Mr. WOODRUM. Could you give us something on that for the record? Of course, we have the dollar increase and the amounts of the funds that you have to audit and have to account for. But is there any other kind of statement you could prepare without too much trouble?

Mr. BAITY. I hardly see how we could do that intelligently, because we would have to guess as to the future as against the past.

Mr. WOODRUM. Well, you know what you are doing now against what you did last year and the year before last. It seems to me you could get up some sort of statement on that.

Mr. BAITY. Mr. Bell of our audit division can give you some ideas as to that particular division.

Mr. WOODRUM. I do not care to have at this moment, but I thought you could get up a statement for the record showing the increase over the last few years as we have stepped up this program.

Mr. BELL. There is something in here which shows that the auditing was stepped up from 11,000,000 vouchers in 1941 to an estimate of 29,000,000 in 1942 and 38,000,000 in 1943.

Mr. WOODRUM. Will you amplify that somewhat for the record? Mr. BELL. I shall do that.

(The information requested is as follows:)

STATEMENT IN AMPLICATION OF JUSTIFICATION OF AUDIT DIVISION ESTIMATES FOR 1943 FOR INCLUSION IN THE HEARINGS BEFORE THE HOUSE APPROPRIATION SUBCOMMITTEE AS REQUESTED BY THE COMMITTEE

In amplification of the estimated work loads of the Audit Division for the fiscal years 1942 and 1943, which when contrasted with the requested 1943 appropriation increase of $4,137,267 over that received in 1942, might at first glance indicate a disproportionate increase of requested funds over work load, it is desired to point out that the greater portion of the huge appropriations with resultant increased expenditures-for national defense for the fiscal year 1942 were, of course, not anticipated in the estimates or appropriations for that year; consequently, this huge unforeseen increase, which will contribute materially in magnifying the work load of this Division carried over into 1943, presents a condition that would not justify the using as a base for 1943 needs the percentage of increase of work receipts alone. This becomes readily apparent when consideration is given to the fact that the current and almost daily preferential demands arising from expenditures made under the unanticipated 1942 national-defense appropriations require the diversion of an ever-increasing force of personnel from activities for which sufficient funds only were made available in 1942.

The estimated carry-over from 1942 combined with the conservatively estimated receipts of work for 1943, which incidentally still appear to be on the upward trend, will aggregate a volume considerably in excess of double the amount of work which this Division can accomplish within the limits of the 1942 appropriation.

The huge volume of work anticipated arises from the great and continued augmentation of the military forces which necessitates the coincidental and stupendous expenditures for the recruiting, housing, care, training, supplying, and equipping of these forces.

Aside from the colossal volume of work, there are new factors arising in the audit work being performed which commensurate with the steady and inevitable rise in expenditures will multiply in extent. These arise from novel fields of expenditures which the Government is entering into through contractual relations, such as, the cost-plus-a-fixed-fee method of contracting for construction projects and the purchase, installation, and use of equipment and facilities, in whole or in part, in private manufacturing plants involving as they do both prime contracts and a train of subcontracts and contribute materially in expanding the burdens of the audit.

SELECTION OF ATTORNEYS

Mr. FITZPATRICK. How do you select your attorneys? Mr. BAITY. Nineteen out of twenty, Mr. Fitzpatrick, are drawn from the Claims Division or the Audit Division.

Mr. FITZPATRICK. Of your own department?
Mr. BAITY. Of our own office.

Mr. FITZPATRICK. You promote your own men?

Mr. BAITY. Yes. An employee who has been through the Audit Division and has become fully informed on auditing, and then goes into our Claims Division and settles claims for years, is better prepared to be an attorney, to prepare decisions, than a judge of a court might be, because they know all the details; they know departmental regulations; they know the Comptoller General's decisions; and they know appropriation laws.

Mr. STARNES. I think that is a good policy and I commend you for it. It keeps the best brains that we have where they are most needed. Mr. BAITY. We follow that policy because it is to our advantage from the standpoint of good administration.

Mr. STARNES. And I think it is to the advantage of the Federal Government to do so, too.

INCREASE OF PERSONNEL IN AUDIT DIVISION

Mr. WIGGLESWORTH. I notice that under your Audit Division you are asking for an increase of 1,898 persons, $4,137,000 plus. That is a 100-percent increase and more. You have an increase of almost 200 in principal audit reviewers, senior audit reviewers, audit supervisors, audit reviewers, and so forth. How do you justify a 100-percent increase in personnel in that Division?

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Mr. BAITY. There will be a 100 percent or more increase in work. Mr. WIGGLESWORTH. As compared with the current fiscal year? Mr. BAITY. There is no doubt about it, Mr. Wigglesworth. truth, the program before us amazes us. We do not know how big it is going to be. But it will be larger than what we are asking for in this appropriation. I am positive of that.

Mr. WIGGLESWORTH. Are you able to keep up with the work now? Mr. BAITY. We are doing fairly well. Of course, the peak has not reached us, nothing like the peak.

STATUS OF WORK PROJECTS ADMINISTRATION CLAIMS SUSPENDED

Mr. WIGGLESWORTH. What is the story on the $27,000,000 worth of W. P. A. claims that were suspended a year ago in Tennessee, Louisiana, and Pennsylvania? Has that been cleared up yet?

Mr. TULLOSS. No, sir; it has not. It is still pending; the accounts are still suspended.

Mr. WIGGLESWORTH. Are you getting anywhere with it at all? Mr. TULLOSS. Well, we have reached a point now where we can definitely determine just how much will be finally disallowed. We are just about ready to take final action on it. It has been necessary to reinvestigate some of the items. That has now been accomplished. Mr. WIGGLESWORTH. Will you advise me when that decision is taken, as to what the decision is and the reasons for it?

Mr. TULLOSs. Yes, sir.

Mr. HENDRICKS. How did these claims arise?

Mr. TULLOSS. They are claims of the United States. Moneys were advanced to an accountable officer to disburse for W. P. A. obligations. In the conduct of the work they diverted material, personnel, money, and what not. We reaudited the accounts and investigated some of them, and found items aggregating, as it now stands, $11,000,000 that we thought were irregular. It has not been determined finally that that amount will stand, but it was so grave that the whole amount for the State of Louisiana was suspended$26,000,000; and that has been held in suspension until we could determine just how much could be allowed.

So it is a claim of the United States against the disbursing officer, the administrative officers, as well as those who were unjustly enriched by these improper payments.

Mr. WOODRUM. Do you have any bonding companies behind the disbursing officers?

Mr. TULLOSs. It would hardly be a drop in the bucket. We have bonds in some cases but they are very small.

Mr. WOODRUM. In some of these cases, criminal action was taken, was there not?

Mr. TULLOSS. Criminal action was taken involving some of the individuals, under the postal laws. If you will recall, the Department of Justice prosecuted them for violating postal laws. No criminal action that I know of has been taken against these individuals for violating the other laws, affecting the embezzlement of funds and diversion of material, and what not.

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Mr. WOODRUM. Has that been called to the attention of the United States attorney's office?

Mr. TULLOSs. Yes, sir.

Mr. FITZPATRICK. Do you think that there is sufficient evidence to present the matter to the Attorney General?

Mr. TULLOSs. Some of this has been called to the attention of the Department of Justice for prosecution. I have not been advised about any prosecutions.

Mr. HOUSTON. Do you prepare the cases, the facts, build them up for the Department of Justice?

Mr. TULLOSS. In a measure, we are giving the Department of Justice the benefit of our information.

Mr. FITZPATRICK. Do you make a recommendation?

Mr. TULLOSs. Yes, sir.

Mr. HOUSTON. You say that a number of these were guilty of embezzlement, at least so far as you think?

Mr. TULLOSs. We think so.

Mr. WIGGLESWORTH. As a matter of fact, the Department of Justice has had your recommendations and the evidence, how long a year or two, is it not?

Mr. TULLOSS. Recommendations went to the Department of Justice from a subcommittee of this committee, following its investigations.

Mr. WIGGLESWORTH. A subcommittee investigating the W. P. A.,

yes.

Mr. TULLOSS. A great deal of that information went to the Department of Justice then, and we have not supplemented that, because the

facts were the same and we have been expecting the Department of Justice to act on that information.

INVESTIGATION OF SUBSTITUTION OF MATERIALS ON CONSTRUCTION WORK UNDER CONTRACT

Mr. WIGGLESWORTH. Mr. Baity, I wanted to ask you, what control, if any, the General Accounting Office exercises over the matter of change of materials in construction jobs that are under contract. It has been alleged that in a good many instances contractors have changed material called for in specifications with resulting substantial savings to themselves, without any reduction in cost to the Government.

Mr. BAITY. Mr. Wigglesworth, that would be a matter, if it did not reach us any other way, that would be reached in the audit of the vouchers by a comparison with the provisions of the contract. If there are any details on that, Mr. Bell, the chief of our Audit Division, can tell you about them.

Mr. WIGGLESWORTH. As a matter of practice, that is eventually checked by the General Accounting Office?

Mr. BAITY. Oh, yes.

Mr. WIGGLESWORTH. Would you say whether or not you have found justification for the allegation just referred to?

Mr. BAITY. I am not familiar with the facts. I do not know whether they have come to the attention of Mr. Bell or not.

Mr. BELL. We would only detect that by field inspection or examination, where there is a substitution made.

Mr. WIGGLESWORTH. Are such inspections made?

Mr. TULLOSS. I will answer that, if I may. We make investigations of that kind where we have information to go on. But, as a rule, the trading of property, if you have in mind the exchange of property-that does not come under the authority of the Comptroller General.

Mr. WIGGLESWORTH. I mean the substitution of one material for another material-that sort of thing.

it.

Mr. TULLOSS. We could only find that if we knew something about

Mr. WIGGLESWORTH. As a matter of fact, have you detected, either under the defense program or in recent years, instances of that kind? Mr. TULLOSS. There have been items of that kind, but I am unable to recall the particulars now. Mr. Bell mentions one that did occur several years ago in the Farm Credit Administration. That would not come under the emergency program.

Mr. WIGGLESWORTH. The proper procedure in an event of that kind is to call it to your attention so that it can be investigated?

Mr. TULLOSS. Yes. Any case where there has been a misappropriation of funds should be called to our attention, but ordinarily they do not like to do that. We have to find out about it in some way ourselves.

INVESTIGATION OF PAY ROLLS IN CONNECTION WITH CONSTRUCTION OF CAMP EDWARDS

Mr. WIGGLESWORTH. Do you have any check over such charges as in connection with the construction of Camp Edwards, in Massa

chusetts, to the effect that all sorts of people were put on the rolls and paid as carpenters who, in fact, were not carpenters? Did any details of that kind come under your supervision?

Mr. TULLOSS. We have investigated some of that. Of course, our force is entirely inadequate to cover the ground. But we have investigated misrepresentations appearing on the pay rolls. We have found some instances where the employees were not employed in the capacity represented. That has not been very extensive, because of insufficient personnel.

AUDIT OF SHIP CONSTRUCTION AND ALTERATION COSTS

Mr. WIGGLESWORTH. What about the matter of ship construction? Do you check the question of costs in detail?

Mr. TULLOSS. Yes, sir.

Mr. WIGGLESWORTH. For instance where Army transports are altered in private yards, there is a sufficient check there to safeguard the Government against excessive costs?

Mr. BELL. That is generally done under contract and they invite competition in those cases, when possible.

Mr. WIGGLESWORTH. The auditing is done under contract?

Mr. BELL. No; the performance of the work is done under contract, and we audit in accordance with the terms of the contract, which are frequently on a labor time and material basis, and, of course, we must ordinarily rely on the certificate of the administrative officer with respect to the services or work performed and materials furnished.

VIOLATIONS OF THE PRINTING LAW

Mr. WIGGLESWORTH. The Public Printer, when he was before the Deficiency Subcommittee last year, stated then, in substance, that the existing law was now being violated by the practice of Government departments having printing done outside of his jurisdiction or control, so to speak. Do you recall his statement on that?

Mr. BAITY. Mr. Wigglesworth, all of our printing is done by the Public Printer, except in a few instances where he gives us authority to buy by recontract outside, for the reason he does not produce that kind of work.

Mr. WIGGLESWORTH. I did not have the General Accounting Office in mind as much as the general practice in other departments and agencies. I think the Public Printer probably included multigraphing and multilithing and things of that kind, that go on without any control of them by the Public Printer. My question is, if it is in fact against the law, how does it get by?

Mr. BAITY. So far as it relates to our office, it is not involved, because we are not guilty of the practice.

Mr. WIGGLESWORTH. I am talking about the general practice and the auditing of it.

Mr. BELL. The rule is that it depends on the purpose for which the machine is bought. If it is bought for something that ordinarily requires printing, we would question it. If they say it is for mimeographing or some internal office use, it is all right. But we question any case where we think the job should have been performed by the Government Printing Office.

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