"A Shocking Situation"

Sooner or later, every dollar spent by the U.S. Government must pass the watchful eye of ex-Congressman Lindsay Carter Warren. As the $12,000-a-year Comptroller General of the U.S., Warren has frequently barked an alarm at war contract settlements; he believes that "everybody and his brother were out to get the Government during the lush war years." Last week, Watchdog Warren showed some real bite. In a report to Congress on war contract settlements, he accused federal agencies of "improper payment of many millions of dollars of public funds through fraud, collusion, ignorance, inadvertence or overliberality."

Warren had found "excessive" payments of $11.5 million in 1,114 cases (12.1%) out of 9,195 contract settlements audited. This was only "a small sampling," and he could not "hazard a guess as to the entire extent of fraud and overpayment" in some $300 billion of war contracts. Even so, it was "a shocking situation." In some instances, said Warren, 20% of the contract price had been 'kicked back" to Government officials, 'either directly, through their relatives, or through dummy corporations" owned by the Government officials. Other sample cases:

P:An Army officer told a friend the prices submitted by other bidders, and the officer's friend underbid them to get a contract for $40,375. When the contract was canceled, the bidder was paid $34,343.75, although his "actual costs were only $7-053.13," and the officer went to work for his friend.

P:Two Army officers received shares of stock worth $2,000 in return for "part-time services" to a company that "shortly thereafter" obtained Government contracts of more than $100,000.

Warren pinned most of the blame for overpayments on the Contract Settlement Act of 1944, which permitted Government agencies to settle contracts in full before final auditing by Warren's office. He had long advocated part payments, up to 75%, before final auditing. As it was, Warren had recovered $474,717 in "voluntary" rebates from overpaid contractors. More might have been recovered, he said, if Government contract agencies had rot "devoted their efforts to defending the excessive settlements." Last week, as Warren turned his evidence over to the Department of Justice for prosecution, Congress ordered an investigation of its own.

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