situation that I am trying to bring to the attention of the committee, this time I will talk about new shovels and not about old shovels. Looking at the item still to the Marion Steam Shovel Co., under No. 2491, on page 202, amounting to $37,485, a memorandum with reference to that purchase sets forth that the purchase of one Marion standard type 4101 electric revolving shovel, low bidders were Northwest Engineering Co. and the Link Belt Co. You state that it would appear that the purchase of the Marion shovel was unauthorized, since by purchasing a Bucyrus-Erie shovel at a lower cost than Marion, it was admitted it would meet specifications. That one deals with new shovels. And to get over it quickly, the next item, 3475 Mr. BIDDLE. Would you like to read the answer to this item? Representative WOLVERTON. They follow one another, and I thought maybe he could make the answer with reference to both of them. me. Mr. BIDDLE. I see. Representative WOLVERTON. If he would rather, it is all right with Mr. BIDDLE. It doesn't make any difference. Representative WOLVERTON. The other item was the Marion Steam Shovel Co., $37,240, purchase of one Marion standard type 4101, three other bidders were lower than the accepted bid, namely, the Bucyrus Erie Co., the Harnischfager Sales Corporation, and the Link Belt Co. Mr. TULLOSS. Shall I read the reply of the Tennessee Valley Authority? Representative WOLVERTON. If you wish. Mr. TULLOSS. On the first item the reply is as follows: Northwest Engineering Corporation bid did not meet our specifications. Our specifications called for 3-yard dippers and Link Belts quotation was based on 22-yard struck measure dippers. On tabulation it was found that the two lowest bids which met our specifications were Marion Steam Shovel Co. and Bucyrus Erie Co. The cost of equipment manufactured by Marion Steam Shovel Co. was $1,525 greater than that by Bucyrus. The weight of Bucyrus Erie shovel was 19,000 pounds less than that of Marion Steam Shovel Co.-consequently the Marion shovel cost less per pound. We, however, went a step further in order to determine the value of the equipment of the two manufacturers whose price was nearly the same, and purchased the shovel so that evaluated operating costs could be kept and used for future reference in buying this type of equipment. The reply to the second item is as follows: Delivery being the essence of order, Harnischfager and Link Belt could not meet this requirement. Our specifications were as follows: "With Ward Leonard control, or equal mounted on crawler trucks, 21⁄2 cubic yards capacity, equipped with 21⁄2 cubic (struck level), rock type dipper. Delivery date is important and will be considered in awarding the contract. The weight of this shovel was 21,800 pounds greater than its competitors, this feature being advantageous to us due to fact it was to be used in deep digging. Representative WOLVERTON. Now, in view of the fact that in both cases they justified this in the manner indicated with respect to approving the purchase of the Marion steam shovel over Bucyrus, the following entry in your report takes on some interest, because under the very next item it states that they purchased from the Bucyrus Erie Co. one electric shovel for $35,745.50, and the Link Belt Co. was the low bidder there. If their objections to the Bucyrus were such that they should not be given a contract, even though the low bidder in the two instances that you have referred to, what explanation was given for purchasing the same month one from the Bucyrus Erie Co. at $35,745.50, where it was not the low bidder? Mr. TULLOSS. The reply is as follows: On the two shovels for Wheeler Dam, our invitation to bid specified WardLeonard controls, and this automatically eliminated all shovel manufacturers with the exception of Marion Steam Shovel Co., and Bucyrus Erie and Harnischfager Sales Corporation. The low bidder could not meet our specifications. Harnischfager revised their bid as originally quoted f. o. b. Milwaukee, and added $1,360 to their bid for delivery at Wheeler Dam. (This revision not shown on 1036.) But request for revision is on file. This made the low bidder Bucyrus Erie Co. Representative WOLVERTON. Then the specifications for the purchase of this $35,000 item were so drawn that only two companies could really bid on them? Senator SCHWARTZ. Three. Representative WOLVERTON. I thought he said the Marion and Bucyrus. Is that statement of mine correct, or am I in error when I said their reply stated that there were only two that could comply with it, the Marion and the Bucyrus? Mr. TULLOSS. The specifications eliminated Marion Steam Shovel, Bucyrus Erie, and Harnischfager-I mean eliminated all except those three. Representative WOLVERTON. Are you sure that you have the one in mind that I examined you on? This one is order No. 4373. Mr. TULLOSS. Yes, sir; $35,745.50. Representative WOLVERTON. Now, I don't want to take the time of the committee in going down through these items. There has been enough of it I think to sufficiently show I think to the committee that on this question of low bidding that there has been the thought on the part of the General Accounting Office that the T. V. A. was not always observing that provision of law. On the other hand, the replies that are made by the T. V. A. indicate that in their judgment, if they had discretion, the right to exercise discretion, that there was a reason for them to do what they did. STATUS OF AUDIT AND EXCEPTIONS Now, that situation having presented itself to the General Accounting Office, subsequent to the criticisms being made in this report of 1934, you have stated that of this total amount of $2,100,000, that many of those items have been removed upon the information subsequently submitted by the T. V. A.? Mr. TULLOSS. Recommended for removal? Representative WOLVERTON. Yes. Mr. TULLOSS. Yes, sir. Representative WOLVERTON. Now, evidently there are some that still remain. Now, I could go through all of this report, there would be 200 pages of it, nearly, that deal with items of that kind, and it would take up the time of this committee, and we would not be getting anywhere with it. Now, what I have in mind is this, do you have a list at the present time, or can you indicate on the report of 1934, those items that still remain unexplained, or for which the explanation is not satisfactory? Mr. TULLOSS. I can furnish that information. We don't have it with us. Representative WOLVERTON. How much would that amount to, in the total? Do you know offhand approximately? Mr. TULLOSS. I don't recall; no, sir. Representative WOLVERTON. I have some place gotten the idea, it may be all wrong, that there is an amount of nearly $800,000 still remaining. Mr. BIDDLE. I think it is $80,000. Representative WOLVERTON. I beg your pardon? Mr. BIDDLE. It is $80,000 according to the figures submitted to me from the field audit, although the figures have not been approved by Washington. In other words, only $80,000 remain. Representative WOLVERTON. What I am after is not the field audit. Mr. BIDDLE. Washington has not removed any of these. The field office recommend their removal, but the Washington office as I understand has not acted on any of them. Is that correct? Mr. TULLOSs. That is correct. Representative WOLVERTON. Well, you say $80,000, and the information I have is approximately $800,000. Now, which is right? Mr. TULLOSS. I think your figure is more nearly correct, $850,000 some odd. Mr. BIDDLE. On the 1934, first year's, exceptions? Mr. OWEN. Yes. You see, that figure is being adjusted from time to time. Representative BARDEN. That is of items that have been charged up that your department does not approve? Mr. TULLOSS. No, that is what the auditors have not recommended. removal of exceptions on. Mr. BIDDLE. On the first year's report, Mr. Tulloss? Mr. OWEN. I will qualify that to say that I was dealing with the figure for the year 1935, where I remember it from, because that is the report that I was working on when I had $851,000. Mr. TULLOSS. You were carrying $850,000 forward to 1935? Representative BARDEN. Did you have available the explanations at that time? Mr. OWEN. No; another man has charge of the exceptions and I was working the consolidated balance sheets and profit and loss, and he gave me a figure and told me it was subject to adjustment. It was $851,000, or thereabouts, and he did adjust it from time to time by removing a few exceptions. Representative BARDEN. And in the light of those explanations that you have there in the answer Mr. OWEN. That is what it was based on. Representative BARDEN. That would remove a great many more, is that right? Mr. OwEN. No, he was removing them on the basis of these exceptions. You see, in Knoxville, he went over each item with a member of the T. V. A. who presented their case, in addition to this information, additional evidence, and that was where the figure of $851,000 came from. Representative BARDEN. There are still some that have not been satisfactorily explained to you? Mr. OWEN. Oh, yes. Representative WOLVERTON. Now, have you gotten to a point where you are able to report how many items are excepted to in 1935, 1936, 1937, and so far in 1938? Mr. TULLOSS. We have reported in our letter of November 22, 1938, the total number of items involved, and the total amounts involved for the whole period. Representative WOLVERTON. What are the amounts involved? Mr. TULLOSS. As I recall roughly the number of items excepted were over 17,000, aggregating over $18,000,000. The number of items removed was something over 12,000 as I recall, aggregating something over $12,000,000, leaving forty-some-hundred items, aggregating over $6,000,000. Representative WOLVERTON. So that at the present time there is over $6,000,000 of exceptions outstanding as between the General Accounting Office and the T. V. A. Mr. TULLOSS. On the basis of the recommendations of our auditors. Representative WOLVERTON. Yes. Mr. TULLOSS. Not approved by the Comptroller General. Representative WOLVERTON. Now, is that for the entire period from June 16, 1933, up to the present? Mr. TULLOSS. Up to June 15, 1938. Representative WOLVERTON. So that that total sum of $6,000,000 covers the entire period that you have just stated? Mr. TULLOSs. Yes, sir. Representative WOLVERTON. Now, when will that be available to this committee? Mr. TULLOSS. Well, we have not finished the 1935 report, and we will have 1936, 1937, and 1938 to prepare, so I am afraid Representative WOLVERTON. When will they be ready? Mr. TULLOSS. I am sorry, I could not even estimate it. We find so much difficulty in completing reports that we have missed every offer as to the time in which it would be completed. Representative WOLVERTON. Are the records in your office with respect to these exceptions in such condition that regardless of your report it would be possible for any accountant appointed by this committee to go through those $6,000,000 items, and make a report to this committee? Mr. TULLOSS. He could; yes, sir. Representative WOLVERTON. How big a job is that? Senator SCHWARTZ. That's a mere bagatelle, you can do that on a Saturday afternoon. Representative WOLVERTON. I know we do some things in a hurry. Senator SCHWARTZ. I wish I could return the compliment to you. Representative WOLVERTON. But I don't think this is something that should be done in a hurry. There are others besides you, Senator, that wish that, but I have got a responsibility, and I am not going to be kidded away from it. Mr. BIDDLE. May I ask some questions, Mr. Chairman? Have you finished? Representative JENKINS. May I ask a question there? Representative JENKINS. It has been brought out here that there has been some difficulty in getting a complete audit of the T. V. A. activities. Now, you say that that is not peculiar to the T. V. A., that you have with other departments some trouble occasionally? Mr. TULLOSS. Yes, sir. Representative JENKINS. Now, you come up to the place where you give us startling information, which startles us every time we get it, although it happens many times, and that is the fact that the great auditing department of the greatest Nation in the world cannot get past 1935 to save your life with this T. V. A. Have you any other organization of the Government that is in any way comparable to T. V. A., where you are so far behind you cannot bring their audits up to date? Mr. TULLOSS. No, sir; I don't believe we are that far behind with any other. Representative JENKINS. In other words, the T. V. A. stands out alone in that respect? Mr. TULLOSS. There are isolated spots where we have to make a field examination that we have not reached, and may go back beyond that date, but they are few. Representative JENKINS. But you have been able though, even though there are some isolated spots or departments, you have been able to come up with your audit of those departments, except of course for the spots Mr. TULLOSS. Yes, sir. Representative JENKINS. But with this T. V. A. you never have gotten past 1935 to save your life? Mr. TULLOSS. That is right, except that we have made the field examinations. Our reports have not been completed. Representative JENKINS. You didn't make that examination until this last summer, you were not able to make that until this committee got busy down in Knoxville, were you? Mr. TULLOSS. This last visit to Knoxville and vicinity was for 1938 only. We had made the field examination for 1937 and prior years. This particular visit was to bring it up to a current date. Representative JENKINS. It had some effect anyway, didn't it? Mr. TULLOSS. Well, it was our duty to make the examination as soon as possible, and we had the money this year to do it, so we started promptly on the first of the year, laying aside the completion of these earlier activities, so that we would have the benefit of what we found on the books for 1938, before we made these other reports. Representative JENKINS. If the T. V. A. had cooperated with you as the other agencies of the Government have cooperated with you, would you be in this predicament, or would you have passed this long ago? |