estimated drainage in lieu of drilling or operating offset wells, and to exchange Government land in naval petroleum reserve numbered 1 or the right to royalty production from any of the naval petroleum reserves for privately owned land or leases within naval petroleum reserve numbered 1 in order to consolidate and protect the oil lands owned by the Government: Provided, That no lease of any portion of the naval petroleum reserves nor any contract alienating the use, control, or possession thereof from the United States Government nor any contract for compensation for estimated drainage, nor any exchange of land or the right to royalty production herein authorized, shall be made except with the approval of the President; and the Secretary of the Navy shall report annually to the Congress all agreements entered into under this authority."

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TO AUTHORIZE AN INCREASE IN THE LIMIT OF COST OF TWO FLEET SUBMARINES (H. R. 14922)

NAVY DEPARTMENT, Washington, December 6, 1928.

The CHAIRMAN COMMITTEE ON NAVAL AFFAIRS,

House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: There is inclosed herewith a copy of a letter, together with a copy of a proposed bill to authorize an increase in the limit of cost of two fleet submarines, this day forwarded to the Speaker of the House of Representatives.

Sincerely yours,

CURTIS D. WILBUR,

Secretary of the Navy.

NAVY DEPARTMENT,

Washington, December 6, 1928.

The SPEAKER OF THE HOUSE OF REPRESENTATIVES,

Washington, D. C.

MY DEAR MR. SPEAKER: I have the honor to transmit herewith a draft of a proposed bill to authorize an increase in the limit of cost of two fleet submarines.

The purpose of the proposed legislation is to increase the limit of cost for construction and machinery of two fleet submarines authorized by the naval appropriation act for the fiscal year ending June 30, 1926 (43 Stat. L. 881), to $6,650,000 each.

Fleet submarine V-5, building at the Portsmouth Navy Yard, and fleet submarine V-6, building at the Mare Island Navy Yard, both vessels using engines built at the New York Navy Yard, have a limit of cost for construction and machinery of $5,300,000 authorized by the naval appropriation act approved February 11, 1925. Under date of February 10, 1926, the Portsmouth and Mare Island Navy Yards were directed to submit estimates of navy-yard costs and were authorized to proceed with the preparation of plans, schedules of materials, laying down of lines in the mold loft, and preparation of plate model, but were informed that no purchase of material and no work of construction would be undertaken until such time as the estimates had been approved. On receipt of these estimates it appeared that the total cost of the vessels, including the navy-yard estimates and other charges to be lodged against the limit of cost would be somewhat in excess of the authorized limit. This department then arranged for representatives of the two navy yards and representatives of the Bureaus of Construction and Repair and Engineering to meet at the Portsmouth Navy Yard for the purpose of studying the estimates in detail. As a result of this study, revised

estimates were submitted by the navy yards, from which it appeared that the estimated cost of the V-5 would be $5,298,000 and of the V-6 $5,283,000, both estimates containing an apparent margin of $137,000 to provide for contingencies.

The present limit of cost for the V-5 and V-6 is the same as the limit of cost originally authorized for fleet submarine V-4 by the naval appropriation act approved May 23, 1924. In preparing the estimates for the V-5 and V-6, consideration was given to the probable cost of the V-4, which was building at the Portsmouth Navy Yard, using engines built at the New York Navy Yard. At that time the estimated cost of the V-4 approximated the then limit of cost of $5,300,000 and careful consideration was given to the practicability of making such savings on the work as would permit building the V-5 and V-6 within the same limit, it being noted that these two vessels are of the same general type as the V-4, except that they have torpedo tubes aft instead of mine tubes, are about 50 tons heavier, and have two knots greater speed, and under the same conditions would cost somewhat more than the V-4. The officers who studied the estimates were of the opinion, however, that the yards' expectation of more economical construction of the V-5 and V-6 was justified and the estimates were approved.

It later became apparent that the V-4 could not be built within the original limit of cost and this limit was finally raised to $6,500,000. Similar action was indicated for the V-5 and V-6. The committees and the Bureau of the Budget were informally advised of this, so that the matter might be considered in making estimates of probable expenditures, but the recommendation for a change in the limit of cost was deferred to as late a date as possible, so that more accurate information might be available as to the probable cost of the vessels.

Practically complete cost returns are now in for the construction of the V-4, and it appears that the total cost of this vessel will closely approximate the present limit of cost of $6,500,000. Using the same unit costs and making allowance for the differences in design noted above, the total cost of the V-5 and V-6 would approximate $6,750,000 each. Based on the revised estimates submitted by the Portsmouth Navy Yard for the V-5, the estimated cost of this vessel is $6,520,000. While it is expected that some economies will be realized in the building of the V-5 and V-6 as compared with the cost of the V-4, the Navy Department considers it uncertain if economies to the extent of those indicated by this estimate will be realized, and recommends that the limit of cost for the V-5 and V-6 be increased to $6,650,000 each.

At the estimated rate of progress the expenditures on the V-5, the more advanced of the two, will reach the present limit of cost in the fall of 1929, and the expenditures on the V-6 will reach the present limit of cost about the end of the calendar year 1929. The Navy Department therefore recommends that the limit of cost on these vessels be increased at the present time in order that the necessary authority may be available to proceed with such expenditures as will be required for the completion of the vessels.

The proposed legislation was referred to the Bureau of the Budget with the above information. Under date of December 6, 1928, the

Director of the Bureau of the Budget advised the Navy Department that this proposed legislation is not in conflict with the financial program of the President.

Sincerely yours,

CURTIS D. WILBUR,
Secretary of the Navy.

A BILL To authorize an increase in the limit of cost of two fleet submarines

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the limitation of $5,300,000 each imposed in the naval appropriation act for the fiscal year ended June 30, 1926, on construction and machinery expenditures on account of two fleet submarines is hereby increased to $6,650,000 each.

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