Senator REED. Would you give us an abstract of the statutes under which you operate? That would be helpful.

Mr. MASSIE. Surely.

(The information requested appears on p. 33.)

Mr. MASSIE. Getting back here to the indefinite situation, I have here a bill of lading that describes the material as "L ship material." It involves a large number of crates and boxes and a total weight of 20,000 pounds, practically. We can't rate that shipment on "L shipment material." There is nothing in the classification like that. So we have to write and develop what they did ship. By the time that gets to the Navy Department, who did the shipping

Senator REED. Who made out that bill of lading?

Mr. MASSIE. The Navy, I assume. The issuing officer would be a naval officer.

Senator REED. Mr. Massie or Mr. Ellis, the point you can make that would have the most force with me would be the statutory direction under which the General Accounting Office operates. In other words, if a disbursing officer makes a payment for transportation immediately and then his accounts must come to you for audit and final action, that takes time. Is there a statutory direction to that effect?

Mr. ELLIS. That is right.

Senator REED. That is the thing that I think is important that you develop fully but concisely and file with the committee, so that it can be made a part of the record. If they do not know how to make out a bill of lading, I do not know how much weight might be attached to that.

Mr. MASSIE. The difficulty is that nothing has been done until we get it and when we reach it we cannot tell, so it becomes necessary to go back and ask the Navy, "What was this material?" Then I had another case described as clothing, "Clothing, NOIBN."

There is no indication of what kind of clothing, except, that is, a technical term. We don't know whether there is a provision for it or not. There was a lower commodity rate that would have been applicable if it had been “Clothing, woolen." You have to develop those things.

Mr. ELLIS. Could I develop one other point?

Mr. Chairman, this ought to come in now because of your reference to other statutes. Aside from the method of making payments, Congress also has directed that the rates be different in many cases for the Government from that of any private shipper. That is, under section 22 of the Transportation Act, the carriers are authorized to contract with the United States for special rates. I really don't know how many there are, but there are many, many of those rates now in effect.

Senator REED. Let us get that straight, Mr. Ellis. The statute does not direct it. It does permit a different rate to be made for governmental units.

Mr. ELLIS. That is right.

Mr. MASSIE. That is right.

Mr. ELLIS. The result is that that complicates tremendously the job of getting back overpayments because we have so much more material and data to consider, study, and discover.

Senator REED. As you first made your statement, you indicated that the statute directed a different rate.

Mr. ELLIS. It permits; that is, the directive permits the carriers to charge less to the Government.

Senator HAWKES. It permits the Government and the carriers to enter into a special arrangement under which the Government will get a lower rate than is given by the tariff to all other shippers.

Mr. MASSIE. That is right.

Mr. ELLIS. There are many thousands of those rates, as I understand it. As a practical matter, that complicates the job of auditing and necessarily delays it because of that much more data to discover and to find out about. Of course, we cannot deny that Senator Hawkes has the correct point of view that a great deal of this trouble is doubtless caused by the size of the Government's establishment. It is a little bit the same thought that Mr. Justice Brandeis had many years ago that there is a necessary amount of inefficiency and delay connected with sheer bigness, and we can't deny that. But it is firmly believed by the people who have worked up these methods of handling transportation that we are saving the taxpayers a great amount of money because this way of central auditing by one expert rate organization is an effective way to audit and it is the cheapest way to audit.

If you want, for example, to have a group of auditors in each little place all over the world where we make payments, you would tremendously increase administrative costs to the detriment of the taxpayers. I think there is no question but that it can be demonstrated that the present system is by far the most economical one for the Treasury. That is the reason that we have what otherwise appears to be a rather unusual system.

Senator REED. Have you had the cooperation of the carriers in obtaining these refunds that you are speaking of?

Mr. ELLIS. As far as I know. Do you want to comment on that? Mr. WILSON. They are not as cooperative as they were. Resistance is building up.

Mr. ELLIS. Would you rather put that the other way around? I was told that especially during the war years we did have a great deal of cooperation by the carriers.

Mr. MASSIE. Yes; possibly because of the income-tax situation. Nevertheless, we did get some voluntary refunds. Carriers themselves would find out they had charged too much and would refund. Is that true?

Mr. WILSON. Yes, sir.

Senator HAWKES. Mr. Massie, did I understand you to say that prior to 1940 you had preaudit before payment of transportation charges? Mr. MASSIE. Yes, sir. We had it this way. Either the administrative office did the auditing before they paid it or they sent the bills to the General Accounting Office for an audit before payment.

Senator HAWKES. How much time did that save? How much time would this new system save in the payment of charges?

Mr. MASSIE. I don't know that I could say on that, Senator.
Senator HAWKES. Could you get any idea and give it to us?
Mr. MASSIE. I would be glad to.

Senator HAWKES. I think it would be interesting to know.

Mr. ELLIS. I would hate to have us be in the position of agreeing to furnish what may be impossible to demonstrate. I don't know that you can actually demonstrate in days, months, or weeks how much

quicker it is now to make payment than it would be on the other system.

Mr. MASSIE. I don't think you could do that.

Mr. ELLIS. That is what the question is.

Mr. MASSIE. It is now much more prompt. It does allow you to catch an overpayment before it is made.

Senator HAWKES. Could you not take a number of spot cases before and after 1940 and give us an idea how much time is saved by the new system which in your opinion makes it necessary from your point of view to have this greater time in which the Government can file, its claims for overcharge?

Mr. MASSIE. We will be glad to do what we can on that.
Senator HAWKES. I think that will be interesting.

(The following was submitted:)

As shown by part II of the memorandum supplementing the GAO testimony, the time required for a payment of a bill under the former preaudit practice averaged from 80 to 90 days. The same time was required for the payments made by the War and Navy Departments, which were audited by their own staffs before payment and without reference to GAO (those payments, of course, were post-audited in GAO).

A recent survey of a relatively small number of current payments now going through the audit process is to the effect that 35 days, as an approximate average, now elapse between the date of a transportation bill and the date of its payment. Upon that basis (although both figures are samplings and necessarily inconclusive), the average time saved the carrier on each bill is about 50 days.

Mr. MASSIE. The language of the bill says the statute shall run from delivery or tender of delivery. If we apply that literally, the carrier sometimes could defeat the bill by not presenting their bill until after 2 years, and that is not so very exceptional an occurrence. In other words, there have been bills presented more than 3 years after the service was completed.

Senator HAWKES. Before you ever got a bill?
Mr. MASSIE. Before we got the bill; yes, sir.
Senator HAWKES. What is the excuse for that?

Mr. MASSIE. The carriers may have difficulty in getting somebody to approve their bill for them. There are various different reasons which may arise, but nevertheless the fact remains that there are a good many. It is not altogether isolated, would you say?

Mr. WILSON. No, sir.

Mr. MASSIE. Where the payment is made after the statute has run, then we would be in the position of paying with no time for recovery of overpayment. I mention that merely to show that what is permissible under the bill, what is possible under the bill, as it now is,

you see.

Senator HAWKES. Mr. Massie, there is another thing I personally would like very much to see. You say there are a good many cases where the bills have not been presented for 3 years. I think this committee ought to know something about some of those cases, just some of them, giving us an idea of how much there were of that type that took 2 or 3 years, and what was the reason ascribed to it. That is an amazing statement to make.

Mr. MASSIE. I don't know that I can give you any estimate on the proportion of them, but I can get you some examples. We do not segregate those cases as they come in and say "all these are beyond

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the statute," because heretofore we have not been bothered with the statute. It would be physically impossible to go back and have the accounts searched and find what proportion they are.

Senator HAWKES. I do not want you to give the proportion. You say there are a good many of them and if there are, you certainly ought to be able to give us a few of them.

Mr. MASSIE. I will be glad to.

(The information requested appears on p. 38.)

Senator HAWKES. I think it is an amazing statement that it is 3. years after a job is performed before you get a bill.

Mr. ELLIS. It is not at all uncommon, I can say, Senator, in other fields. I am not an expert in transportation, but I know that happens not at all infrequently in other cases.

Senator HAWKES. You mean with the Government?

Mr. ELLIS. Yes.

Senator HAWKES. But not in private business. I never heard of such a thing.

Mr. ELLIS. Of course, it is uncommon.

Senator HAWKES. I never heard of such a thing in my life in all the business experience I have ever had.

Mr. ELLIS. I could say that the number could be considerable without being large in percentage.

Senator HAWKES. Yes.

Mr. ELLIS. Last year, for example, we settled nearly 90,000 claims alone. Aside from all the audited paid amounts, we also settled 90,000 transportation claims. So the numbers are so huge that we could find plenty of examples, I suppose, of overage claims.

Senator HAWKES. You have two things to guide you. One is the tariff and the other is the private agreement between the Government and the railroad or the carriers. Why should it take such a great period of time to decide whether the thing comes under one or the other?

Mr. ELLIS. Senator, I should not answer that perhaps because I don't pretend to be a transportation man, but I can answer you the impression that we in the Comptroller General's office get as we work on the transportation field. I don't know of any more highly technical or involved field of questions that come before the Comptroller General for decision than the transportation problems. I have reviewed many of those decisions without having, thankfully, the responsibility for their correctness. I can certainly tell you they are far more complex to figure out the correct answer than other questions that we have under contract payments or Army pay or travel or the hundreds of other fields that we cover.

Just why that must be, I would not be in a position to know, but I can certainly say that is our experience.

Then, also, the point was made before, and I emphasize again, it is not merely a question of finding the right rate, but the facts are what are tremendously difficult to discover. That I believe is what is correctly attributed to what the Senator refers to as the sheer size of the problem. The Government deals all over the world. It is the biggest enterprise there is anywhere that I know of. It deals not in dozens but in hundreds of agencies and departments that are not necessarily expert in getting the proper rate in their deal with the carriers, and

it is a job of impossible complexity to get the facts and apply the correct rate to each case as it comes along.

The size is almost incomprehensible. I was told of one account during the war, one account of payments alone, one monthly account of one officer's, whose papers would fill this room. I was told also in connection with the storage problem on all the transportation payments made during the war, that the papers would easily fill Union Station from one end to the other.

Senator HAWKES. That proves, then, my philosophy that it may be necessary to contract our activities if we are going to survive as a government of the people.

Mr. ELLIS. That may be the right answer. Size certainly has its effects.

Senator REED. A good many people think Government establishments are too large, but we are not going to settle that in this committee.

Senator HAWKES. No; not today.

Senator REED. Do you have a further statement?

Mr. ELLIS. I want to emphasize that the law now tells us to treat the Government as a shipper differently from any private carriers, both from the standpoint that we deal on credit, while the private shipper deals for cash.

Secondly, the physical matter. We cannot audit in the time that this bill calls for.

Third, the Government has its special type of rates which do complicate the job.

Fourth, our interest in the bill, as we have said, is solely as it affects the Government. We have no policy pronouncement, of course, as to what the bill should be otherwise.

Fifth, I want to close with the Comptroller General's personal recommendation that the bill as drawn would be distinctly not in the public interet insofar as it affects the United States shipments. Senator REED. You are referring to H. R. 2759?

Mr. ELLIS. Yes. That is the bill primarily we were studying. Finally, we would think that it is entirely proper and just to give to the carriers the same 10-year limit which they have in their claims against us, or if you prefer and feel it necessary to make it the same as the six-year law, which is applicable to their suits, that, of course, could not be objected to because it would be fair to both sides.

Senator REED. You are referring to suits in the Court of Claims? Mr. ELLIS. Yes, and, of course, in the United States district courts. Finally, we do think it highly important that Congress make it clear to us what the rule is supposed to be. As at present, it is a highly complex job of interpretation to figure out whether this bill in its present legislative status, in view of the statements on the floor of the House-whether that bill would cover the United States or not is a highly different proposition

We do hope that whatever you decide, it be made explicit.

Senator HAWKES. I want to say that I agree with you most emphatically on that point. It ought to be specific so that there is not any question of interpretation.

Mr. ELLIS. I am going to furnish the material that you have requested.