False Teeth & Prerogatives

A traditional title that goes with the job of U.S. Comptroller General is "Watchdog of the Treasury." The Comptroller, grizzled, paunchy Lindsay Carter Warren of North Carolina, is proud of the title. He is also justly proud of his reputation in the House of Representatives as a dead-earnest, last-ditch supporter of the Congress' Constitutional right to examine the way the Administration spends every last penny of the people's money.

False Teeth. Last week the House Military Affairs Committee listened while Lindsay Warren recited a long list of reasons why his General Accounting Office should have the final say on a most difficult postwar problem that is already here: what to pay war contractors when their war contracts are terminated. GAO, he said, had already found 270 "extraordinary" items among the charges allowed by the War Department in its cost-plus-fixed-fee contracts. Among the most extraordinary:

> The cost of Christmas greetings and other personal telegrams and cables, juke boxes, vitamin pills, valet services, and $225 for "a spare set of false teeth."

> $10,000 for cognac, gin, rum and Scotch for a North Ireland officers' club, with no offsetting credit for resale of the liquor; other charges running into the millions for refundable items or for goods on which the price was later reduced.

> Wages for a "41-hour" work day for a single employe; transport charges for taking an employe's wife to a maternity ward; $1.39 for shipping another employe's dog.

False Teeth Explained. "I could go on ad infinitum and ad nauseam," cried Watchdog Warren, ". . . and yet the War Department says we have no right to challenge these things."

Promptly the War Department challenged his figures: GAO, said Under Secretary of War Robert P. Patterson, "had actually disallowed less than 10-c- per $1,000" on Army contracts (or $100,000 per billion dollars). He said that 90% of Lindsay Warren's 270 items had either been detected and disallowed by the Army itself or subsequently approved by GAO. The false teeth, said Mr. Patterson, were due to a Navy--not Army--order that a contractor's technicians take an extra pair along to Russia (together with extra glasses) because such medical minutiae are unobtainable there. "While I hold no brief for the dog," concluded Judge Patterson, "does an item of $1.39 really justify a charge of incompetence?"

Watch Dog in a Fix. Last week's exchanges on dogs and false teeth were merely the first public flicker of an intergovernmental fire that has smoldered underground for months. The Army--speaking for all Administration contracting agencies--has fought to establish its absolute right to terminate war contracts once & for all on its own terms, precisely because it fears that GAO's meticulous audits would "go on ad infinitum." Already in this war $5.9 billion in contracts have been cancelled, as military needs changed. Come peace, some $75 billion, 100,000 prime contractors and more than 1,000,000 subcontractors will be involved.

By the time GAO's fine-tooth comb has gone over so many billions, the Army is sure that many war contractors will be broke and many more severely hampered in achieving the main postwar objective of getting U.S. productive capacity swiftly converted to peacetime work. No amount of "savings" on specific overcharges would be worth that kind of loss, in the long run.

Congressmen were torn between their belief in fiscal watchdogging and the demands of their business constituents for speedy conversion. They respectfully pressed GAO Boss Warren for his views. He admitted the compelling need for speed in terminating war contracts.* He also admitted that GAO could not possibly be fast enough 1) with its present funds and staff or 2) under his original suggestion that a meticulous audit of every item was necessary. The Army admitted that it had made some mistakes, would be bound to make some more, and that some war contractors would inevitably get away with modified murder in the process.

At week's end the Administration tightened its ranks. A new six-man committee on contract renegotiation--a problem inseparable from the termination problem--was set up. Its job: to set a consistent policy on profits v. profiteering.*

* After World War I, some Government-business fights over war costs (notably the Bethlehem Steel case, finally settled in Bethlehem's favor in 1942) went on for more than 20 years. Today GAO, although it is relatively up-to-date on current audits, is still two to three years behind on less pressing business. * Committee members: the Army's Price Adjustment Board Chairman Joseph M. Dodge (chairman); Navy's PAB Chairman Kenneth H. Rockey (vice chairman); Maritime Commission's Thomas M. Woodward (also representing War Shipping Administration); Treasury's Captain Harry C. Maull Jr.; RFC's Charles T. Fisher; WPB's Carman G. Blough.

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