Mr. FINLEY. We did not realize it would be necessary.

Senator MAYBANK. I wonder why they do that. It seems to me that last year that was agreed on in conference.

Mr. FINLEY. That was agreed on in conference; yes, sir. The Jensen amendment is really one of the most serious things that confronts us now.

Mr. MCBRIDE. The Jensen amendment was made this year on the floor of the House.

REQUEST FOR EXEMPTION FROM HOUSE CUT

Mr. FINLEY. Mr. Chairman, it is respectfully requested that action be taken again to exempt the National Gallery of Art from the inhibition contained in section 406 of H. R. 7072, and, in addition, that the reduction of $118,900 as approved by the House be restored in the final appropriation in order that the National Gallery may be properly maintained and the works of art therein adequately protected as in the past.

I would also like to call attention to the pledge given by the Congress in the joint resolution establishing the National Gallery of Art, in which, in section 4 (a), the faith of the United States is pledged to provide such funds as may be necessary for the upkeep of the National Gallery.

PROTECTION OF WORKS OF ART PLEDGED BY UNITED STATES

GOVERNMENT

At the time the gift was before Congress for acceptance, this was said in one of the speeches made on the floor presenting the matter to the Senate. I would like to quote a paragraph from the speech:

What are the burdens which this measure puts on the Government? Mr. Mellon makes a gift of $30 million worth of pictures, $10 million for a building in which to house them, and $5 million for an endowment.

Actually that was an understatement. It turned out that Mr. Mellon's gift amounted eventually to considerably more than that

amount.

What are his conditions? All the conditions he makes are that the Government shall take care of the pictures and shall make them available to the people of the United States. That is all. He gets nothing. The only responsibility the Government assumes is that it will not allow sabotage; that it will provide guards so that the great masterpieces may not be mutilated and destroyed. The Government is to provide facilities whereby the collection may be opened up to the public so that every citizen of the United States may have an opportunity to see it. * * * That is all the function the Government assumes. Of course, it will take a little money; it will have to pay for guards; it will have to pay for the charwomen; it will have to pay the employees who care for the pictures and who make them available to the people. Guides will be needed to explain them, and the Government will provide for them. That is the only burden which the Government of the United States assumes in accepting this gift.

I would also like to read a paragraph from the joint resolution which constitutes the charter of the Gallery.

The faith of the United States is pledged that, on completion of the National Gallery of Art by the donor in accordance with the terms of this act, and the acquisition from the donor of the collection of works of art, the United States will provide such funds as may be necessary for the upkeep of the National Gallery of Art and the administrative expenses and costs of operation thereof, including the protection and care of works of art acquired by the Board, so that

the National Gallery of Art shall be at all times properly maintained and the works of art contained therein shall be exhibited regularly to the general public free of charge.

GALLERY OPEN DAILY TO PUBLIC

From the time the Gallery opened in 1941 through World War II and to the present, this language has been taken to mean that the Gallery should be open to the public 7 days each week with the exception of Christmas and New Year's Day; and that the basic standard of protection should be one guard for each two galleries. The Bureau of the Budget and the Congress have consistently concurred in these views. By providing one guard for each two galleries, and by stationing that guard generally in the connecting area between those two galleries, it has been possible to maintain a system of protection whereby each work of art and each visitor to the Gallery has been within the direct view of the guard at all times the Gallery is open to the public.

To close the Gallery 1 day each week would be to lower its standards below that of the Metropolitan Museum in New York, or the Art Institute in Chicago, and others which are open 7 days a week. Obviously, the Gallery's status as the National Gallery of Art is important in attracting the gifts which constitute the sole means of achieving the growth which is the essence of the Gallery.

CONDITIONS ON ART GIFTS

Furthermore, I would like to mention that in the case of the most important gifts, especially in the Mellon-Kress-Widener collections, these gifts that have been made to the Gallery since its establishment, are expressly conditioned upon the gallery being supported as indicated in the charter. The trustees, the Bureau of the Budget, and the Congress have since 1941 established a pattern of conduct which may amount to an authoritative construction of the charter as meaning that the Gallery shall be open 7 days a week. In view of this, there might be considerable einbarrassment to the Gallery if there were a failure to comply with an express condition precedent of the major gifts and, perhaps, an implied condition of other gifts made after the pattern was established.

Mr. Chairman, in view of all these provisions, we feel that it would be a departure from an established interpretation of the law if we are forced to close the gallery to the public for even 1 day for the lack of adequate funds for the upkeep of the Gallery and the protection of the works of art which it contains.

I hope that the Congress will not reduce the amount requested but will show the same understanding of the Gallery's needs and the same willingness to provide for them as it has done in the past.

Thank you.

Senator MAYBANK. I appreciate your testimony. As I understand it, if the House cut remains, you may have to close the Gallery 1 day a week, and I understand it was just an across-the-board cut and there were no reasons given.

Mr. FINLEY. All we are asking is that we should continue to operate as at present and that we should not go backward. That is what our request amounts to.

Senator CORDON. Mr. Chairman, may I make one inquiry?

The statement here accompanying the justification which makes expression adverse to the method used by the House in making its reduction, sets forth that $27,900 of the reduction was made in the item "Other obligations."

There was a statement in the case that those other obligations were certain fixed items representing 66.2 percent of that particular budget item. It does not indicate what the other 37.7 percent is made up of. Could you tell me what it is?

Mr. HAYES. That is principally supplies. There are about $30,000 in that item.

Senator CORDON. Well, that is not here. I see. I made an error. I thought you had carried your supplies as $2,345, whereas that is the amount that your 1953 budget is under your 1951. Then the amount of supplies is substantially $30,000?

Mr. HAYES. Yes, sir.

Senator CORDON. Leaving only $7,700 to cover all the other items.

THE RENEGOTIATION BOARD

SALARIES AND EXPENSES

STATEMENTS OF JOHN T. KOEHLER, CHAIRMAN, LAWRENCE E. HARTWIG, BOARD MEMBER, FRANK ROBERTS, BOARD MEMBER, JOHN H. JOSS, BOARD MEMBER, M. L. REESE, DIRECTOR, OFFICE OF ADMINISTRATION, AND JOHN L. GANLEY, JR., BUDGET OFFICER, THE RENEGOTIATION BOARD

RECOMMENDED ACTION ON HOUSE CUT

Senator MAYBANK. Without objection, the justification and the letter under date of March 31 will be made a part of the record. (The material referred to follows:)

Hon. BURNET R. MAYBANK,

THE RENEGOTIATION BOARD, Washington, D. C., March 31, 1952.

Chairman, Subcommittee in Charge of the Independent Offices Appropriation
Bill, 1953, United States Senate.

DEAR SENATOR MAYBANK: I refer to your letter of March 18, 1952, concerning the appropriation of funds for the operation of the Renegotiation Board for the fiscal year 1953.

As you note, we are indeed aware of the salutary disposition of Congress to hold all appropriations to a minimum. We also realize the necessity of your committee's viewing any single appropriation in the light of the aggregate cost of the whole Government operation. It is the firm belief of the Board that our original estimate and the justification thereof was presented in full recognition of this approach as the minimum amount required to carry on the important operation of the Renegotiation Board. The Board submitted to the Congress a budget of $7,500,000 for fiscal year 1953 after careful consideration of its anticipated workload, its responsibilities in administering the act, and its capacities. I have outlined below the bases for the development of the budget as presented. The purpose of the Congress in passing the Renegotiation Act of 1951 was to provide a method of removing excessive profits in connection with defense procurement. The contracts of 19 agencies now carry the renegotiation clause. In the early months of operation, the Board received voluntary renegotiation refunds amounting to $3,279,000, and checks totaling that amount have been turned over to the Treasurer of the United States.

To be effective, the renegotiation process must be conducted as soon as possible after the close of contractors' fiscal years. Excessive profits should be captured and returned to the Treasury of the United States at the earliest possible moment. Information developed from the renegotiation process gives material aid to the procuring agencies in obtaining full dollar values in the first instance. Likewise, the availability of such information leads to closer pricing by Government contractors.

It is anticipated that the Renegotiation Act of 1951 will require the filing of 57,000 statements by contractors and subcontractors subject to the act during the fiscal years 1952 and 1953. Of this amount approximately 20,000 will be assigned to the field organization (composed of regional boards in New York, Chicago, Washington, Los Angeles, Detroit, and Boston) for the full renegotiation process leading to the determination and elimination of excessive profits. On the basis of studies and experience gained under the prior acts, the Board has determined that approximately 6,800 cases must be completed during the fiscal year 1953, if the act is to be effectively administered. This amount, in addition to the number of cases completed in the remainder of 1952, will leave the Board with a backlog of 8,160 cases assigned to the field, plus approximately 5,000 cases in departmental processing for a total backlog of approximately 13, 160 cases as of June 30, 1953. The Board, in determining the number of cases which must be completed, considered (1) the policy of the Congress in passing the act; (2) the importance of renegotiation information to efficient procurement through close pricing, which is the best method of eliminating future excessive profits; (3) the average time required for completion of a review and determination; (4) the statute of limitations contained in the act; and (5) the over-all impact on the national economy of unearned dollars remaining in the hands of contractors. If the Board were to complete much less than 6,800 cases during the fiscal year 1953, the over-all effectiveness of the Renegotiation Act would be seriously reduced.

To complete 6,800 cases will require 923 man-years of personal services at an estimated cost of $5,933,000. This estimate was developed on the basis of case studies and experience gained under the prior acts and modified by recent experience. An additional amount of $1,567,000 for other items of expense including rent, communications, travel, equipment, etc., was developed after careful study of the operational requirements of the Board's components.

H. R. 7072, Independent Offices appropriation bill, 1953, page 30, lines 8 through 17 inclusive, refers to a proposed appropriation for the Renegotiation Board. The Board recommends the following changes in the bill: in line 12 after the word "appropriation" and before the word "hire" insert the words "purchase (not to exceed 3) and"; in line 13 substitute for the amount of "$180,000""$400,000"; in line 17 substitute for the amount "$4,907,800"-"$7,500,000".

The House bill proposes a travel limitation of $180,000. The Renegotation Board's studies indicate that $400,000 is the minimum amount of travel funds required to assure efficient administration of the act. In the conduct of renegotiation, the Board is required by statute to give full consideration to several factors including: (1) reasonableness of costs and profits; (2) net worth with particular regard to the amount and source of public and private capital employed; (3) the extent of the risk assumed; (4) the nature and extent of contribution to the defense effort; and (5) character of business. To evaluate these factors and further, to maintain cognizance of plant operations, it is necessary for representatives of the Board to visit the facilities of those contractors subject to the act. During the fiscal year 1953, when many contracts are being renegotiated for the first time, inspections of the facilities of a major portion of all contractors with possible excessive profits will be required. The Board estimates that each member of its professional staff will be in travel status 20 full days during fiscal year 1953. The Board, in full cognizance of the desires of the Congress to keep expenses at a minimum, has instituted strict control over the expenditure of travel funds. The estimate of $400,000 is a minimum estimate. For purposes of local transportation and administrative servicing, the Board has requested authority to purchase three passenger vehicles, which will be used at field locations. Board will have no more than one vehicle at each regional headquarters.

The

The other members of the Board and I welcome this opportunity to justify the Renegotiation Board budget for fiscal year 1953. We are prepared to submit to the committee any further information concerning our present operations and those proposed for the fiscal year 1953 which the committee desires.

Sincerely yours,

95711-52-17

JOHN T. KOEHLER,

Chairman.

THE RENEGOTIATION BOARD JUSTIFICATIONS FOR ESTIMATES OF SALARIES AND EXPENSES, FISCAL YEAR 1953

For necessary expenses of the Renegotiation Board, including expenses of attendance at meetings concerned with the purposes of this appropriation; purchase (not to exceed three) and hire of passenger motor vehicles; services as authorized by section 15 of the act of August 2, 1946 (5 U. S. C. 55a), at rates not to exceed $50 per diem for individuals; and rents in the District of Columbia; $7,500,000 (act of March 23, 1951, Public Law 9).

PURPOSE OF APPROPRIATION

The general purpose of the appropriation "Salaries and expenses, Renegotiation Board" is to provide funds for salaries and all other expenses of the Renegotiation Board, created by the Renegotiation Act of 1951 (Public Law 9, 82d Cong., approved March 23, 1951) with authority for the determination and elimination of excessive profits realized by contractors and subcontractors in connection with procurement under the national-defense program.