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The PRESIDING OFFICER. The question is on agreeing to the amendment.

The amendment was agreed to.

The bill was ordered to be engrossed for a third reading, read the third time, and passed.

COMMISSION ON AREA PROBLEMS OF THE GREATER WASHINGTON METROPOLITAN AREA

The PRESIDING OFFICER laid before the Senate a message from the House of Representatives announcing its disagreement to the amendments of the Senate to the bill (H. R. 2236) for the establishment of a Commission on Area Problems of the Greater Washington Metropolitan Area, and requesting a conference with the Senate on the disagreeing votes of the two Houses there

on.

Mr. SCHOEPPEL. I move that the Senate insist upon its amendments, agree to the request of the House for a conference, and that the Chair appoint the conferees on the part of the Senate.

The motion was agreed to; and the Presiding Officer appointed Mr. SCHOEPPEL, Mr. BUTLER, and Mr. JOHNSON of Colorado conferees on the part of the Senate.

LEAVE OF ABSENCE

On his own request, and by unanimous consent, Mr. HOLLAND was excused from attendance on the sessions of the Senate for the remainder of this week and until Wednesday night of next week.

GROUP LIFE INSURANCE FOR CIVILIAN OFFICERS AND EMPLOYEES IN THE FEDERAL SERVICE Mr. CARLSON. Mr. President, I move that the Senate proceed to consider the bill (S. 3681) to authorize the Civil Service Commission to make available group life insurance for civilian officers and employees in the Federal service, and for other purposes.

The PRESIDING OFFICER. The clerk will state the bill by title.

The LEGISLATIVE CLERK. A bill (S. A bill (S. 3681) to authorize the Civil Service Commission to make available group life insurance for civilian officers and employees in the Federal service, and for other

purposes.

The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Kansas.

The motion was agreed to; and the Senate proceeded to consider the bill.

Mr. CARLSON. Mr. President, before I begin my remarks, I ask unanimous consent-and I have discussed this matter with the majority leader and the minority leader-that Mr. Warren B. Irons, a member of the staff of the Civil Service Commission, be given the privilege of the floor during the consideration of this bill.

mission to make available group life insurance for civilian officers and employees in the Federal service. As chairman of the Post Office and Civil Service Committee, charged with consideration of this bill, I wish to outline its principal provisions and discuss briefly the plan and necessity therefor.

This important proposal results from studies by a subcommittee of the Cabinet, formed last winter to explore how the administration could best provide the necessary elements of a well-rounded personnel program for the Federal service. Last February, President Eisenhower included group life insurance in a statement of the administration's legislative program for Federal personnel management.

Briefly, the group insurance program authorized by the bill would cover nearly all civilian employees in the executive, legislative, and judicial branches of the United States Government, including Members of Congress, Federal judges, and employees of the District of Columbia Government. The Commission could, by regulation, exclude persons whose coverage would be administratively impracticable such as part-time or intermittent employees. Noncitizen employees with permanent duty station outside a State or the District of Columbia would be excluded from coverage.

Each eligible employee, without medical examination, would be automatically covered unless he elects to the contrary. Therefore, participation in the plan would be entirely voluntary.

Each covered employee would be insured for a sum equal to his annual compensation raised to the next higher multiple of $1,000, with a maximum of $20,000 in any case. Double indemnity in event of accidental death, and dismemberment insurance would also be provided. The amount of insurance would be reduced by 2 percent a month after the individual attains age 65, subject to a maximum reduction of 75 percent.

As his share of premium cost, there would be withheld from the employee's salary an amount not exceeding 25 cents bi-weekly for each $1,000 of life insur

This rate would not fluctuate with the age of the employee. The Government would contribute from existing agency appropriations an amount not exceeding one-half the sum withheld from the employee. This premium cost and its distribution between the employee and the Government conforms to the usual practice in private industry.

Payment of the insurance upon death would be made in the same order of precedence as now provided for lumpsum death payments in the Civil Service Retirement Act and the Federal Employees Leave Act.

The Commission would purchase from one or more companies meeting specified qualifications a policy or policies to provide the insurance benefits. These companies would establish a single administrative office to assure the utmost economy in the operation of the plan. Such companies would be required to reinsure portions of the total insurance, in accordance with a stated formula, with such other companies which elect to participate. Thus there would be nationwide company participation in a fair and equitable manner.

The Commission would determine the

premium rates to be charged by insurance companies on a basis consistent with the lowest rates charged large employers for group life and accidental

death and dismemberment insurance. Adjustment of rates would be made as experience requires. Companies would be required to make annual reports accounting for all income and expenses under the policies.

A special fund would be set up in the Treasury in which would be deposited employee and Government contributions. The fund would be available for companies and for administrative expremium payments to the insurance penses. I am assured and believe that the total administrative cost would not exceed 2 percent of the total premiums and that no additional appropriation would be necessary for administrative expense.

The Commission would act to protect the rights of separated or retired employees now insured through nonprofit associations of Federal employees, provided the insurance was granted prior to January 1, 1954, and the association terminates all its life insurance agreements and turns over assets sufficient, if possible, to cover the liabilities involved.

The bill creates an Advisory Council on Group Insurance consisting of the Secretaries of the Treasury and Labor and the Director of the Bureau of the Budget to review the program and advise the Commission on policy matters. A committee of five insured employees would be appointed by the Commission to advise regarding matters of concern from the viewpoint of the employees.

The Commission would be required to report annually to the Congress on all phases of the operations.

The Commission would establish an effective date for the insurance and contributions.

I feel that enactment of this proposal will establish a most worthwhile im

Payment of premiums would end at age 65, or earlier if the employee retires for disability or retires for other reason after at least 15 years' civilian service. Otherwise, separation from service would terminate the group insurance protection. At separation, however, the individual would be able, without mediindividual would be able, without medi-provement in the Federal personnel procal examination, to purchase an individual policy at a rate applicable to his attained age. This particular feature is of real importance to the officer or employee who could not otherwise obtain insurance at regular rates because of his physical condition.

The PRESIDING OFFICER. Without attained age. objection, it is so ordered.

Mr. CARLSON. Mr. President, the Senate has now proceeded to consider S. 3681 to authorize the Civil Service Com

gram. It will increase the employee's sense of family security, and provide an inducement to continue service. On the other hand, many real advantages will accrue to the Government in the form of increased employee productivity and decrease in wasteful turnover.

Passage of this bill would adapt to the use of the Government an administrative practice which has proven its value in progressive private business.

The PRESIDING OFFICER. The bill is open to amendment. If there be no amendment, the question is on the engrossment and third reading of the

bill.

The bill was ordered to be engrossed for a third reading, read the third time, and passed, as follows:

Be it enacted, etc., That this act may be cited as the "Federal Employees' Group Life Insurance Act of 1954."

SEC. 2. (a) Except as provided in (b) of this section, each appointive or elective officer or employee (hereinafter called employee) in or under the executive, judicial, or legislative branch of the United States Government, including a Government owned or controlled corporation (but not including any corporation under the supervision of the Farm Credit Administration of which corporation any member of the board of directors is elected or appointed by private interests), and of the municipal government of the District of Columbia shall, at such time and under such conditions of eligibility as the Civil Service Commission (hereinafter called the Commission) may by regulation prescribe, come within the purview of this act. Such regulations may provide for the exclusion of employees on the basis of the nature and type of employment or conditions pertaining thereto such as, but not limited to, short-term appointments, seasonal or intermittent employment, part-time employment, and employment of like nature, and shall be issued only after consultation with the head of the department, establishment, agency, or other employing authority concerned: Provided, That no employee or group of employees shall be excluded solely on the basis of the hazardous nature of employment.

(b) This act shall not apply to noncitizen employees whose permanent duty station is located outside a State of the United States or the District of Columbia, nor shall it apply to commissioned officers and enlisted personnel on active duty in or with the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States, who have indemnity coverage under the Servicemen's Indemnity Act of 1951 (65 Stat. 33).

SEC. 3. (a) Each employee to whom this act applies shall be eligible to be insured for an amount of group life insurance approximating his annual compensation not exceeding $20,000 plus an equal amount of group accidental death and dismemberment insurance, in accordance with the following schedule:

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(b) Subject to the conditions and limitations of the policy or policies purchased by the Commission under this act, as may be approved by the Commission, the group accidental death and dismemberment insurance shall provide payments as follows:

Loss

For loss of life.

Loss of one hand or one foot or loss of sight of one eye.

Loss of two or more

such members.

Amount payable Full amount shown in the schedule in (a) of this section. One-half the amount shown in the schedule in (a) of this section. Full amount shown in the schedule in

(a) of this section., For any accident the aggregate amount of group accidental death and dismemberment insurance that may be paid shall not exceed the amount shown in the schedule in (a) of this section.

(c) The Commission shall by regulation provide for the conversion of other than annual rates of compensation to an annual basis, and shall further specify the types of compensation to be included in annual compensation.

(d) Each of such amounts of insurance shall be reduced by 2 percent thereof at the end of each full calendar month following the date the employee attains age 65, subject to minimum amounts prescribed by the Commission, but not less than 25 percent of the insurance in force immediately preceding the first reduction provided herein: Provided, That the amounts of insurance in force from time to time on an employee who becomes insured under this act after having attained the age of 65 shall be the same as would be in force had he been insured at age 65, and shall be based on the lesser of his annual compensation (1) at the time he becomes so insured, or (2) at age 65, provided he was eligible at that time to be insured

under this act.

SEC. 4. Any amount of group life insurance and group accidental death insurance in force on any employee at the date of his death shall be paid, upon the establishment of a valid claim therefor, to the person or persons surviving at the date of his death, in the following order of precedence:

First, to the beneficiary or beneficiaries as the employee may have designated by a writing received in the employing office prior to death;

Second, if there be no such beneficiary, to the widow or widower of such employee;

Third, if none of the above, to the child or children of such employee and descendants of deceased children by representation;

Fourth, if none of the above, to the parents of such employee or the survivor of them; Fifth, if none of the above, to the duly appointed executor or administrator of the estate of such employee;

Sixth, if none of the above, to other next of kin of such employee entitled under the laws of domicile of such employee at the time of his death.

If any person otherwise entitled to payment under this section does not make claim therefor within 1 year after the death of the employee, or if payment to such person within that period is prohibited by Federal statute or regulation, payment may be made in the order of precedence as if such person had predeceased the employee, and any such payment shall be a bar to recovery by any other person.

SEC. 5. (a) During any period in which an employee under age 65 is insured under a policy of insurance purchased by the Commission as authorized in section 7 of this act, there shall be withheld from each salary payment of such employee, as his share of the cost of his group life and accidental death and dismemberment insurance, an amount determined by the Commission, but not to exceed the rate of 25 cents biweekly

for each $1,000 of his group life insurance: Provided, That an employee who is paid on other than a biweekly basis shall have an amount so withheld, determined at a proportionate rate, which rate shall be adjusted to the nearest cent.

Any policy of insurance purchased by the Commission as authorized in section 7 of this act shall provide that all employees eligible under the terms of this act will be automatically insured thereunder commencing on the date they first become so eligible: Provided, That any employee desiring not to be so insured shall, on an appropriate form to be prescribed by the Commission, give written notice to his employing office that he desires not to be insured. If such notice is received before the employee shall have be

come insured under such policy, he shall not be so insured; if it is received after he shall have become insured, his insurance under the policy will cease effective with the end of the pay period during which the notice is received by the employing office.

(b) For each period in which an employee is insured under a policy of insurance purchased by the Commission as authorized in section 7 of this act, there shall be contributed from the respective appropriation or fund which is used for payment of his salary, wage, or other compensation (or, in the case of an elected official, from such appropriation or fund as may be available for payment of other salaries of the same office or establishment) a sum computed at a rate determined by the Commission, but not to exceed one-half the amount withheld from the employee under this section.

(c) The sums withheld from employees under subsection (a) and the sums contributed from appropriations and funds under subsection (b) shall be deposited in the Treasury of the United States to the credit of a fund which is hereby created. Said fund is hereby made available without fiscal-year limitation for premium payments under any insurance policy or policies purchased as authorized in sections 7 and 10 of this act, and for any expenses incurred by the Commission in the administration of this act within such limitations as may be specified annually in appropriation acts: Provided, That appropriations available to the Commission for salaries and expenses for the fiscal year 1955 shall be available on a reimbursable basis for necessary administrative expenses of carrying out the purposes of this act until said fund shall be sufficient to provide therefor. The income derived from any dividends or premium rate adjustments received from insurers shall constitute a part of said fund.

SEC. 6. Each policy purchased under this act shall contain a provision, in terms approved by the Commission, to the effect that any insurance thereunder on any employee shall cease upon his separation from the service or 12 months after discontinuance of his salary payments, whichever first occurs, subject to a provision which shall be contained in the policy for temporary extension of coverage and for conversion to an individual policy of life insurance under conditions approved by the Commission, except that if upon such date as the insurance would otherwise cease the employee (a) retires on an immediate annuity, and (b) unless retired for disability, has had 15 years of creditable civilian service, as determined by the Commission, his life insurance only may, under conditions determined by the Commission, be continued without cost to him in the amounts for which he would have been insured from time to time had his salary payments continued at the same rate as on the date of cessation.

SEC. 7. (a) The Commission is authorized, without regard to section 3709 of the Revised Statutes as amended, to purchase from one or more life insurance companies, as determined by it, a policy or policies of group life

and accidental death and dismemberment insurance to provide the benefits specified in this act: Provided, That any such company must meet the following requirements: (1) Be licensed under the laws of 48 of the States of the United States and the District of Columbia to transact life and accidental death and dismemberment insurance, and (2) the amount of its employee group life insurance on the most recent December 31 for which information is available to the Commission shall on that date equal at least 1 percent of the total amount of employee group life insurance in the United States in all life insurance companies.

(b) The life insurance company or companies issuing such policy or policies shall establish an administrative office under a name to be approved by the Commission.

(c) The Commission shall arrange with the life insurance company or companies issuing any policy or policies purchased under this act to reinsure, under conditions approved by it, portions of the total amount of insurance under the policy or policies, determined as provided in subsection (d) of this section, with such other life insurance companies as may elect to participate in such reinsurance.

(d) The Commission shall determine a formula so that the amount of insurance in force to be retained by each issuing company after ceding reinsurance and the total amount of reinsurance ceded to each reinsuring company shall be in proportion to the total amount of each such company's group life insurance in force in the United States on December 31, 1953: Provided, That in determining such proportions, that portion of any company's group life insurance in force on December 31, 1953, which is in excess of $100 million shall be reduced by 25 percent of the first $100 million of such excess, 50 percent of the second $100 million of such excess, 75 percent of the third $100 million of such excess, and 95 percent of any excess thereafter: Provided further, That the amount retained by or ceded to any company shall not exceed 25 percent of the amount of that company's total life insurance in force in the United States on December 31, 1953: Provided further, That if, at the end of one year following the date of enactment of this act, in the case of any issuing company or reinsurer which insured employees of the Federal Government on December 31, 1953, under policies issued to an association of Federal employees, the amount which results from the application of this formula is less than the decrease, if any, in the amount of such company's insurance under such policies, the amount allocated to such company shall, upon the first reallocation as provided in subsection (e) of this section, be increased to the amount of such decrease: And provided further, That any fraternal benefit association which is licensed under the laws of a State of the United States or the District of Columbia to transact life insurance and is engaged in issuing insurance certificates on the lives of employees of the Federal Government exclusively shall eligible to act as a reinsuring company and may be allocated an amount of reinsurance equal to 25 percent of its total life insurance in force on employees of the Federal Government on December 31, 1953.

be

(e) The companies eligible to participate as reinsurers, and the amount of insurance under the policy or policies to be allocated to each issuing company or reinsurer may be redetermined by the Commission for and in advance of any policy year after the first, on a basis consistent with subsections (c) and (d) of this section, with any modifications thereof it deems appropriate to carry out the intent of such subsections, and based on each participating company's group life insurance in force, excluding that under any policy or policies purchased under this act except in the case of companies covered in the third proviso of subsection (d), in the

United States on the most recent December 31 for which information is available to it, and shall be so redetermined in a similar manner not less often than every 3 years or at any time that any participating company withdraws from participation.

(f) The Commission may at any time discontinue any policy or policies it has purchased from any insurance company.

SEC. 8. (a) Each policy or policies purchased under this act shall include, for the first policy year, basic tables of premium rates as follows:

(1) For group life insurance, a schedule of basic premium rates by age which the Commission shall have determined on a basis consistent with the lowest schedule of basic premium rates generally charged for new group life insurance policies issued to large employers, this schedule of basic premium rates by age to be applied, except as otherwise provided in this section, to the distribution by age of the amounts of group life insurance under the policy at its date of issue to determine an average basic premium rate per $1,000 of life insurance, and

(2) For group accidental death and dismemberment insurance, a basic premium rate which the Commission shall have determined on a basis consistent with the lowest rate generally charged for new group accidental death and dismemberment insurance policies issued to large employers.

Each policy so purchased shall also include provisions whereby the basic rates of premium determined for the first policy year shall be continued for subsequent policy years, except that they may be readjusted for any subsequent year, based on the experience under the policy, such readjustment to be made by the insurance company or companies issuing the policy on a basis determined by the Commission in advance of such year to be consistent with the general practice of life insurance companies under policies of group life and group accidental death and dismemberment insurance issued to large employers.

(b) Each policy so purchased shall include a provision that, in the event the Commission determines that ascertaining the actual age distribution of the amounts of group life insurance in force at the date of issue of the policy or at the end of the first or any subsequent year of insurance thereunder would not be possible except at a disproportionately high expense, it may approve the determination of a tentative average group life premium rate, for the first or any subsequent policy year, in lieu of using the actual age distribution. Such tentative average premium rate shall be redetermined by the Commission during any policy year upon request by the insurance company or companies issuing the policy, if experience indicates that the assumptions made in determining the tentative average premium rate for that policy year were incorrect.

(c) Each policy so purchased shall contain a provision stipulating the maximum expense and risk charges for the first policy year, which charges shall have been determined by the Commission on a basis consistent with the general level of such charges made by life insurance companies under policies of group life and accidental death and dismemberment insurance issued to large employers. Such maximum charges shall be continued from year to year, except that the Commission may redetermine such maximum charges for any year either by agreement with the insurance company or companies issuing the policy or upon written notice given by it to such companies at least 1 year in advance of the beginning of the year for which such redetermined maximum charges will be effective.

(d) Each such policy shall provide for an accounting to the Commission not later than 90 days after the end of each policy year, which shall set forth, in a form approved by the Commission, (1) the amounts of pre

miums actually accrued under the policy from its date of issue to the end of such policy year, (2) the total of all mortality and other claim charges incurred for that period, and (3) the amounts of the insurers' expense and risk charges for that period. Any excess of the total of item (1) over the sum of items (2) and (3) shall be held by the insurance company or companies issuing the policy as a special contingency reserve to be used by such insurance company or companies for charges under such policy only, such reserve to bear interest at a rate to be determined in advance of each policy year by the insurance company or companies issuing the policy, which rate shall be approved by the Commission as being consistent with the rates generally used by such company or companies for similar funds held under other group life insurance policies: Provided, That, if and when the Commission determines that such special contingency reserve has attained an amount estimated by it to make satisfactory provision for adverse fluctuations in future charges under the policy, any further such excess shall be deposited in the Treasury of the United States to the credit of the fund. If and when such policy is discontinued, and if after all charges have been made, there is any positive balance remaining in such special contingency reserve, such balance shall be deposited in the Treasury of the United States to the credit of the fund, subject to the right of the insurance company or companies issuing the policy to make such deposit in equal monthly installments over a period of not more than 2 years.

SEC. 9. The Commission shall arrange to have each employee insured under such policy receive a certificate setting forth the benefits to which the employee is entitled thereunder, to whom such benefits shall be payable, to whom claims should be submitted, and summarizing the provisions of the policy principally affecting the employee. Such certificate shall be in lieu of the certificate which the insurance company or companies would otherwise be required to issue.

SEC. 10. (a) The Commission is authorized to arrange with any nonprofit association of Federal employees for the assumption by the fund of any existing life insurance agreements of such association with its members retired or otherwise separated from the Federal service and to insure the obligations assumed with any company or companies meeting the requirements of section 7 (a).

(b) Any such arrangement shall provide that payments by such insured members for life insurance only shall thereafter be made at the same rates to the fund, under such conditions as the Commission may prescribe.

(c) Any such arrangement shall further provide that there be transferred to and deposited in the fund the lesser of the following amounts:

(1) The total assets of the life insurance fund of such association; or

(2) The amount required to meet the liabilities under life insurance agreements assumed, taking into account the payments as provided in paragraph (b). The determination of this amount shall be based on an actuarial valuation satisfactory to the Commission, procured by the association without expense to the Commission.

(d) The arrangements authorized by this section shall be made only with those associations which terminate life insurance agreements with all of their members within 1 year after the date of enactment of this act, and such arrangements shall apply only to life insurance granted to any member by any such association before January 1, 1954.

(e) In any case in which the fund assumes a liability for life insurance as provided in this section in respect to a person who (1) subsequently becomes eligible to be insured as an employee under this act, and (2) does not give notice, as provided in section 5 (a),

of his desire not to be so insured, the life insurance provided under this section shall terminate as of the date such person becomes insured as an employee.

SEC. 11. Except as otherwise provided herein, the Commission is hereby authorized to promulgate such regulations as may be necessary and proper to give effect to the intent, purposes, and provisions of this act.

SEC. 12. (a) There is hereby established an Advisory Council on Group Insurance consisting of the Secretary of the Treasury as Chairman, the Secretary of Labor, and the Director of the Bureau of the Budget, who shall serve without additional compensation. The Council shall meet once a year, or oftener at the call of the Commission, and shall review the operations of this act and advise the Commission on matters of policy relating to its activities thereunder.

(b) The Chairman of the Commission shall appoint a committee composed of five employees insured under this act, who shall serve without compensation, to advise the Commission regarding matters of concern to employees under this act.

SEC. 13. The Commission shall report annually to Congress upon the operation of this act.

SEC. 14. The district courts of the United States shall have original jurisdiction, concurrent with the Court of Claims, of any civil action or claim against the United States founded upon this act.

SEC. 15. The insurance provided by this act and the withholdings and contributions for that purpose shall become effective when directed by the Commission.

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MENT OF CERTAIN MERCHANTTYPE VESSELS

Mr. CARLSON. Mr. President, I move that the Senate proceed to the consideration of Calendar No. 1656, Senate bill 3546, to provide an immediate program for the modernization and improvement of such merchant-type vessels in the reserve fleet as are necessary for national defense.

The PRESIDING OFFICER. The clerk will state the bill by title.

The LEGISLATIVE CLERK. A bill (S. 3546) to provide an immediate program for the modernization and improvement of such merchant-type vessels in the reserve fleet as are necessary for national defense.

The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Kansas.

The motion was agreed to, and the Senate proceeded to consider the bill, which had been reported from the Committee on Interstate and Foreign Commerce with amendments.

Mr. BUTLER. Mr. President, S. 3546 is known as the emergency ship repair bill. I introduced it in cosponsorship with a number of other Senators, after 2 days of hearings, which were held for the purpose of ascertaining the extent of the plight of our shipyards. Companion bills were introduced promptly in the House of Representatives. I can assure Senators that, in my opinion, one of the most urgent needs in the maritime industry today is the passage of this bill.

The bill would authorize the Secretary of Commerce to enter into contracts with private shipyards on the Atlantic, Pacific, and gulf coasts, the Great Lakes, and other inland waterways, for the repair, modernization, and improvement of cer

tain carefully selected strategic merchant vessels in the laid-up National Defense Reserve Fleet. The Maritime Administrator testified at our hearing that after consultation with the Department of Defense, he was sure that there were at least 205 vessels of a top-priority nature in our reserve fleet which would need at least $45 million worth of repair before they could be put into active service.

Senators will notice in the bill that the Secretary of Commerce is authorized to enter into contracts on other than a competitive bid basis whenever such action is deemed by him to be necessary to carry out the purpose of this act. The reason for that provision, as our report makes clear, is that we believe that the Secretary of Commerce must be authorized to exercise a certain amount of discretion as to where the work will go, in order to protect the defense potential of those yards, upon which the Department of Defense is placing great reliance in its mobilization day planning. This is particularly important because of the fact that some of the reserve fleets are much closer to certain yards than to others on the same coast. The difference in towing charges from reserve fleet to bidding yard might well result in the yard nearest the fleet being able to get a disproportionate share of the available work unless the bill were worded as it is.

According to the Maritime Administrator, 92 of the ships in question are presently located in the reserve fleet on the east coast, 32 on the gulf coast and 81 on the west coast.

While this bill will not aid those yards devoted entirely to shipbuilding, it should prove of great value to the combination shipbuilding and ship repairing yards and to those which are devoted solely to ship repairing.

I might say that this is not the first time a program of this nature has been considered. In 1950 Congress appropriated $18 million for the same purpose but the funds were diverted to emergency repairs on cargo vessels which were used in the Korean lift.

Mr. LONG. Mr. President, will the Senator from Maryland yield? Mr. BUTLER. I yield.

Mr. LONG. Mr. President, I wish to congratulate the Senator from Maryland for being the principal sponsor of this measure. It is very much needed, and this is a good time for us to be putting our laid-up fleet into such shape that it can be used almost immediately in the event of an emergency.

I have studied the bill, of which I am cosponsor with the Senator from Maryland, and it seems to me there should be an amendment to assure that the Secretary of Commerce and the maritime administrator will take advantage of the split-bidding practice when that practice is in the Nation's interest. I was somewhat concerned about some language in the committee report which indicated that that might not be the case. I have an amendment at the desk which I hope the Senator from Maryland will accept, which would assure continuation of the practice of inviting split bids. At this time I should like to ask unanimous

consent that the clerk may state the amendment which is at the desk.

The PRESIDING OFFICER. The Chair would suggest that the Senator withhold his request until action is taken on the committee amendments.

The clerk will state the committee amendments.

The amendments of the Committee on Interstate and Foreign Commerce were on page 2, line 14, after the word "within", to strike out "six" and insert "twelve", and in line 22, after the word "States", to insert "and on the Great Lakes or other inland waterways", so as to make the bill read:

Be it enacted, etc., That this act may be cited as the "Emergency Ship Repair Act of 1954."

STATEMENT OF PURPOSE

SEC. 2. It is the purpose of this act in the interests of national defense to provide for the immediate improvement and modernization of needed merchant-type vessels in the reserve fleet under the jurisdiction of the Secretary of Commerce, and thereby to

provide a much needed stimulus to the shipbuilding and ship repair industries of the Nation.

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SEC. 3. The Secretary of Commerce shall, after consulting the Secretary of Defense, formulate and carry out to the extent authorized under the provisions of this act a program of repairing, modernizing, or converting such merchant-type vessels in the national defense reserve under the jurisdiction of the Secretary of Commerce as may be necessary to provide for the purpose of national defense an adequate and ready reserve fleet of merchant and auxiliary vessels.

CONTRACTING AUTHORIZATION

SEC. 4. The Secretary of Commerce shall, within 12 months after the date of the enactment of this act, enter into such contracts for the repair, modernization, and conversion of vessels as may be necessary to carry out the provisions of this act. Such contracts (1) may provide for the expenditure by the United States of not more than $45 million, (2) shall be with private shipbuilding or ship repair yards on the Atlantic, Pacific, and gulf coasts of the United States, and on the Great Lakes or other inland waterways, (3) shall be entered into in accordance with applicable provisions of the Federal Property and Administrative Services Act of 1949, and (4) may be negotiated without competitive bidding whenever such action is determined by the Secretary of Commerce to be necessary to carry out the purpose of this act.

AUTHORIZATION OF APPROPRIATION

SEC. 5. There are hereby authorized to be appropriated such sums not in excess of $45 million as may be necessary to carry out the provisions of this act.

The PRESIDING OFFICER. The question is on agreeing to the committee amendments.

The amendments were agreed to. The PRESIDING OFFICER. The Clerk will now state the amendment offered by the Senator from Louisiana [Mr. LONG).

The LEGISLATIVE CLERK. On page 3, line 3, after the numerals "1949", it is proposed to insert "and (4) in entering into such contracts the Secretary of Commerce shall not alter the present Maritime Administration policy of inviting split bids for drydock and nondrydock work. Bids on any such con

tract shall include any towage and insurance costs involved."

Mr. BUTLER. I shall be very happy to accept the amendment offered by the Senator from Louisiana.

The PRESIDING OFFICER. The question is on agreeing to the amendment offered by the Senator from Louisiana.

The amendment was agreed to.
The

PRESIDING OFFICER. The bill is open to further amendment.

Mr. WILLIAMS. Mr. President, on page 2, beginning with line 25, I observe

that the bill reads:

and (4) may be negotiated without competitive bidding whenever such action is determined by the Secretary of Commerce to be necessary to carry out the purpose of this act.

I think that is against the principle outlined in the testimony given in connection with the bill, when representatives of the various agencies, speaking on behalf of the bill, endorsed it, saying that they intended to carry out the principle of competitive bidding. Therefore, I wish to offer an amendment to strike out the language to which I have referred. I hope the Senator from Maryland will accept the amendment.

Mr. BUTLER. As I understand, the amendment would be on page 2, line 25, to place a period after "1949" and to strike out the language beginning with the word "and" and continuing through line 3, on page 3.

Mr. WILLIAMS. That is correct. The PRESIDING OFFICER. The

clerk will state the amendment offered by the Senator from Delaware.

The LEGISLATIVE CLERK. On page 2, line 25, after "1949", it is proposed to insert a period instead of a comma and to strike out:

and (4) may be negotiated without competitive bidding whenever such action is determined by the Secretary of Commerce to be necessary to carry out the purpose of

this act.

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Senator

Mr. SALTONSTALL. The Senator from Delaware and I have been interested in this subject, pro and con, in connection with several different bills and on several different occasions.

I wish to ask the Senator from Maryland if my proposal would not cover what the Senator from Delaware seeks to accomplish, at least, in part-in fact, in great part-without striking out or taking to conference that section. In subparagraph (4) I propose the following language:

May only be negotiated without competitive bidding when such action is determined by the Secretary of Commerce to be neces

sary to carry out the purposes of this act and in the interest of national defense.

In other words, my amendment would not eliminate entirely the right of the Secretary of Commerce to act without obtaining competitive bids.

Mr. BUTLER. I think the Senator from Massachusetts has proposed excellent language. I shall be happy to accept it.

I may also say to the Senator from Massachusetts, that I think, under existing law, and I know under the present practice of the General Accounting Office, if the Secretary of Commerce negotiated a bid, it would not be disturbed.

Mr. SALTONSTALL. I have made the suggestion, which is not quite so violent as the amendment offered by the Senator from Delaware, because, as one of the sponsors of the bill, I believe the purpose is to get ships into condition. It is also the purpose, generally speaking, to spread the business.

As both the Senator from Delaware and the Senator from Maryland know, in the repair and modernizing of some ships, it is very difficult to obtain definite, flat bids, because the situation is not the same as it is in the building of a new ship. In this instance, it is the taking a ship apart and putting it together again, to a certain degree. If there is to be insistence on competitive bids, a bid may be obtained which will be very much higher than an amount which might be submitted under a negotiated arrangement, as the work proceeds.

If the language "in the interest of national defense" is included, the Secretary of Commerce is confined, after studying the matter very carefully, to making a negotiated arrangement without competitive bidding only when such action will carry out the purposes of the act in the interest of the national defense.

Mr. BUTLER. I think the amendment offered by the Senator from Massachusetts is an excellent one. I hope the Senator from Delaware will accede to the request of the Senator from Massachusetts.

Mr. WILLIAMS. I do not see the necessity for such language. First, there is nothing violent about is nothing violent about competitive bidding-at least, not where I come from.

In reading the testimony of representatives of the various agencies which favor the bill, every one of them, to my knowledge—if I am in error, I am certain the Senator from Maryland will correct me-testified that it was intended to use the process of competitive bidding. Therefore, all I am proposing is to strike out the language which indicates that competitive bidding should not be used. I do not say that it must be used. The Government agencies can still operate under existing law, but we will not be spelling out the additional will not be spelling out the additional authority. Certainly they have had the authority to do such things in the past, and they have gone a little far afield.

All I am seeking to do is to strike out the language which suggests that contracts may be negotiated without competitive bidding. There is nothing against that under existing law. The bill would contain the same provision with respect to bidding under which with respect to bidding under which

every agency of the Government is already acting.

Mr. BUTLER. I think that in the national interest, the Government can negotiate a bid, it need not accept the lowest bid.

Mr. WILLIAMS. If the Senator from Maryland is confident that that is the law, then, of course, this paragraph becomes much less valuable, and I would be much less worried about it.

Mr. BUTLER. I am satisfied that under existing law and under the existing practice of the General Accounting Office, if the Secretary of Commerce negotiated a bid, no question would be raised, if such was found to be in the national interest.

Mr. WILLIAMS. I am not trying to enter into a discussion from the standpoint of the interpretation of the law, because I am not a lawyer; but I understand that in a case where there is a competitive bid which is lower than a bid which the Secretary of Commerce can negotiate with another bidder, it is necessary to accept the lower bid. I think that is the existing law. Mr. BUTLER. I do not think that is correct. WILLIAMS. My amendment would not change the existing law. It would strike from the bill the provision

Mr.

which would indicate that contracts may be negotiated without competitive bidding. The representatives of the Government who testified before the committee indicated that they intended to abide by the present law.

Mr. BUTLER. If I were not satisfied

that under existing law there was reasonable leeway, I would not accept the amendment of the Senator from Deljoint resolution. The first is to keep the aware, because there are two parts to the strategic yards in operation, so that they will be available as a defense potential. Second, it is necessary to have the ships which are vitally necessary to the war effort, if a war should come, ready to sail

on a moment's notice.

Mr. SMATHERS. Mr. President, will the Senator yield?

Mr. BUTLER. I yield.

Mr. SMATHERS. I voted for this particular bill in the committee. I thoroughly approve of it and of the purposes for which the Senator from Maryland has stated it was introduced. However, I should like to have the Senator emphasize, for the purpose of the legislative history, that the bill is not supposed to be, in any way, a sort of regional unemployment bill, in the sense that this particular work is not all supposed to go into one area.

Mr. BUTLER. I can assure the Senator from Florida that that is not the purpose of the bill. The purpose of the bill, as I have stated, is to keep the vital yards in existence, ready to do war work, if it becomes necessary to do so; and also to put in class, so to speak, the ships which will be needed in time of emergency.

Mr. SMATHERS. I thank the Senator from Maryland.

With respect to the amendment offered by the Senator from Delaware, I think it is important that provision be made for competitive bidding, because without it,

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