resolved at the Navy-industry level. Reference to the ASBCA is an entirely appropriate course of action, but it is also a costly and lengthy one, and resolution of an issue may take years. This can be painful to industry faced with 12-percent prime rates and what have you.

Needless to say, the situation which evolved from these circumstances and which impacted on almost all our shipbuilders, was not conducive to an effective partnership with industry.

In January of this year Navy had on hand 25 major shipbuilding claims totaling some $550 million. Additionally, shipbuilding contract appeals pending against the Navy before the ASBCA totaled $343 million. We gave instructions to reduce these as fast and as fairly as we could, and since that time, through the concerted efforts of both Navy and claimants, we have made significant progress in reducing this backlog. We have been able to pull some of the claims back from the ASBCA and now are settling, or expect to settle out-ofcourt, a larger number than previously anticipated. Specifically, so far this year we have settled twelve shipbuilding claims totaling approximately $207 million through negotiated settlement procedures, and have resolved out-of-court another $58 million formerly in the ASBCA forum.

Mr. NORRIS. Mr. Secretary, would you mind submitting for the record details of what those claims are and how much they are settled for.

Mr. BENNETT. Just for the record.

[The following information was received for the record:]

INDIVIDUAL CLAIMS SETTLEMENTS/WITHDRAWALS, JAN. 1, 1974, THROUGH SEPT. 30, 1974

ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA), SHIPBUILDING CASES OVER $1,000,000 ON HAND AS

1 Litton Systems, Inc. undocumented appeal of $376,000,000 not included in testimony.

OUT-OF-COURT SETTLEMENTS OF SHIPBUILDING APPEALS PENDING BEFORE ASBCA, JAN. 1, 1974, THROUGH

Secretary MIDDENDORF. It should be understood that these figures do not include a Litton appeal which has been placed with the ASBCA in the stated amount of $376 million. This figure has not yet been fully documented by the company; therefore, we are unable to speak definitely to its amount or basis.

Mr. BENNETT. In other words, it would have to be added to the $550 million and the $343 million.

Secretary MIDDENDORF. That is right.

Discussions with Litton on this appeal are currently in progress. Also, a number of other claims are being discussed with the expectation that most of them will be susceptible to mutual agreement and settlement. Clearly, though, sums of this magnitude well illustrate the fact that much difficult work remains ahead of us in the claims area. We fully recognize this challenge, but even so I am reasonably confident because of the very intense efforts we are directing to this problem that one-half to three-fourths of the total claims backlog as of January 1974, including those now before the ASBCA, will have been settled within the next 6 months.

Chart 3 illustrates the claims picture, and shows the progress we have made to date and expect to make in the future. As shown, we expect to settle $197 million worth of claims by the end of Decem

1000

DEPARTMENT OF THE NAVY

SHIPBUILDING CLAIMS SUMMARY

1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER 1ST QUARTER 2ND QUARTER

CY 1974

LEGEND:

Number Of Claims Shown In []

CY 1975

(25) 550.2M

$M

(23) 531.5M

(15)

500

(13)

ber 1974 and another $142 million by the end of March 1975. Chart 4 depicts progress and objectives with respect to those shipbuilding claims now before the ASBCA. As shown, our goal is to reduce this appeals backlog by another $165 million by the end of this calandar

year.

$M

500

DEPARTMENT OF THE NAVY

ARMED SERVICES BOARD OF CONTRACT APPEALS
CLAIMS APPEALS SUMMARY

1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER 1ST QUARTER 2ND QUARTER

Does Not Include Litton Systems, Inc. Undocumented Appeal Of $376M.

CHART 4

Mr. BENNETT. You haven't said it but you mean it, part of the problem you can't address it to just claims. You give in to everybody when you settle claims. You have to do it thoughtfully for the Government and it is not as easy as it might appear.

Secretary MIDDENDORF. It is obvious that many different government bodies are looking at these claim settlements. We feel that we are settling fairly and the taxpayer is getting his fair share of it. Mr. BENNETT. Criticism has been raised by the contractors, of course, but the fact that they raised all these criticisms shouldn't lead us to do something in extremis. In other words, we have to still do what is best for our trustee relationship to the taxpayer, and I am sure that you are not-I hope you don't feel any pressure by Congress to settle improperly any claims. All you are trying to do is see if you can settle them properly as promptly as possible, in view of the fact that there has been such a large amount of them and such large periods of time involved. You are trying to arrive at a procedure which will allow you to come to the real merits quicker. Is that what you are really trying to do?

Secretary MIDDENDORF. That is right.

Mr. BENNETT. You may need legislation to help you in this. If you do we want to know about it. If there is something we can help you to do we would like to do it. We don't want you to have the impression just because you have heard from a lot of complaining people that necessarily every one of these people has a meritorious claim and it should be settled just to get rid of them.

Secretary MIDDENDORF. I think we should check with some of our shipbuilding friends in this room, who might feel they have been unnecessarily tough on them in settling claims.