TEXTILE PROCUREMENT IN THE MILITARY SERVICES THURSDAY, JUNE 9, 1955 UNITED STATES SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D. C. The subcommittee met at 10:45 a. m., pursuant to Senate Resolution 41, agreed to February 21, 1955, in room 357, Senate Office Building, Senator John L. McClellan (chairman) presiding. Present: Senator John L. McClellan, Democrat, Arkansas; Senator Karl E. Mundt, Republican, South Dakota; Senator George H. Bender, Republican, Ohio. Present also: Robert F. Kennedy, chief counsel; James N. Juliana, chief counsel to the minority; Carmine Bellino, accounting consultant to the subcommittee; Ruth Y. Watt, chief clerk. (Members present at the convening of the hearing were the chairman and Senator Bender). The CHAIRMAN. The committee will come to order. Mr. Lev, would you come forward, please? TESTIMONY OF HARRY LEV, CHICAGO, ILL.-Resumed The CHAIRMAN. All right, proceed. The Chair apologizes for being a little late, but I found it pretty difficult to be in two places at the same time, and I had other important matters that were in another committee earlier this morning. The Senate is not in session today, so we can probably devote more time to the hearing than we can on days when the Senate is in session. So we will proceed in the hope that we can conclude with this witness today. Mr. KENNEDY. Mr. Lev, I want to finish up a couple of matters on this R. and D. that we went into yesterday. Mr. Chairman, to make the record complete, we have here a military specification that was put out the 14th of March 1955. I would like, if we could, to have it made an exhibit for reference. It does not perhaps have to be in the record, but it could be an exhibit for reference, because of the fact that the specifications specifically state that the Harry Lev patent, figure No. 4, United States patent No. 2536134, must be used in this specification. It is a new service, wool, cap, green. The CHAIRMAN. The regulation may be made exhibit No. 68, merely for reference but not for printing in the record. (Exhibit No. 68 may be found in the files of the subcommittee.) Mr. KENNEDY. There is another figure in here, figure 5, a shape support. There is also another patent owned by Harry Lev. The CHAIRMAN. The whole document may be admitted as an exhibit for reference. Senator BENDER. Mr. Chairman, does Mr. Kennedy have the information regarding the stay? Mr. KENNEDY. The grommet? Senator BENDER. There are three items, I believe. Mr. KENNEDY. There are about 16 patents altogether, as I understand it. Mr. LEV. How many? Mr. KENNEDY. Sixteen. Mr. LEV. There are only four-may I answer? Mr. KENNEDY. Excuse me? Mr. LEV. May I answer? The CHAIRMAN. Yes, you may. Mr. LEV. Four are released to the Government, with no royalty whatsoever. The Government has a license to give to the lowest responsible bidder. Senator BENDER. But you are not convincing us that you do not receive some benefit as a result of the Government having that patent. Mr. LEV. No, sir. Mr. KENNEDY. Maybe we can develop that. Senator BENDER. You get your divvy from the sale as a result of your holding that patent. Mr. LEV. I released, generously, and the only thing I am benefiting is by improving my commercial, on the outside. Senator BENDER. But you get extra consideration on other contracts as a result of this concession. Mr. LEV. Nothing of that kind. They have a right-the Government has got the license to give to the lowest responsive responsible bidder. Senator BENDER. As we go along, we will develop this situation, and we will see. Mr. LEV. O.K. Mr. KENNEDY. Mr. Chairman, we went to the Patent Office and requested the patents that were held by Harry Lev, Ben Lev, and Staywell Manufacturing Co. There are 16 patents. You have more than you know you have, I guess. Mr. LEV. Sixteen patents? Mr. KENNEDY. Yes. Three are held by Ben Lev and the rest are held by Harry Lev. Mr. LEV. The documents must be correct. The CHAIRMAN. All right. This may also be admitted, and the pictures of them may also be admitted, as exhibit No. 69, reference. (Exhibit No. 69 may be found in the files of the subcommittee.) Mr. KENNEDY. Isn't it true, Mr. Lev, that when a company buys one of these grommets from another company, that often the inspectors will not pass them, that they will only pass the grommets that have been made by your company? Mr. LEV. No such things of that kind. Mr. KENNEDY. That is not true? Mr. LEV. It is not. Mr. KENNEDY. Then let me ask you whether you don't get a royalty on all the hats that are sold at PX's Mr. LEV. No, sir. Mr. KENNEDY. That contain your patent? Mr. LEV. No, sir. Mr. KENNEDY. That is wrong? Mr. LEV. That is definitely wrong. Mr. KENNEDY. You do not. The royalty-free patents do apply to sale at PX's, is that right? Mr. LEV. Pardon? It isn't clear. I don't understand that. Mr. KENNEDY. You get a royalty for the hats that are sold at PX's and at uniform stores which contain your patent? Do you or don't you? You get a royalty? Mr. LEV. A royalty in what way? Mr. KENNEDY. If the hat has your patent in it, you get a royalty when it is sold at PX's or at uniform stores? Mr. LEV. I am not getting any royalty whatsoever. I am selling them. Senator BENDER. You know what royalty meant when he was asking you about royalty? Mr. LEV. No, we are not. Senator BENDER. You know what the word means. You know seven languages and you are a cultured man. You know what royalty means. Mr. LEV. I know what royalty means. We are selling them the grommet, but we are not charging them any kind of a royalty. Mr. KENNEDY. Let me ask, Mr. Lev, if a PX is going to buy some hats from a company, and it specifies that the hats shall have a patent owned by Harry Lev, doesn't that company have to buy that component from you? It cannot buy it from anybody else or make it themselves; isn't that correct? Mr. LEV. Now, 1 second now. Mr. KENNEDY. That is yes or no. Is it correct? Mr. LEV. No; there is explanation about it. Mr. KENNEDY. All right. Mr. LEV. There is explanation about it. If I were to go ahead and release for private enterprise, I might as well take the entire patent and throw him out the window. Therefore, I am not getting any royalties. I sell them. The CHAIRMAN. What you mean is, instead of getting a royalty on each grommet, or each item that is manufactured by the use of your patent, instead of that, you sell to the company the right to use your patent for a fixed sum? Mr. LEV. No. The CHAIRMAN. No? Mr. LEV. No, not for outside. For outside I did not release for that reason. I released for Government use only. The CHAIRMAN. You released for Government use only? The CHAIRMAN. In other words, the private operators, manufacturers, who are manufacturing for sale at PX's and uniform stores, but not manufacturing to sell to the Government for the armed services, those have to buy the components of this patent from you? Mr. LEV. That is correct. The CHAIRMAN. That is the way it is? Mr. LEV. That is correct. The CHAIRMAN. I think I understand it. Mr. LEV. Yes; there is explanation about it, again. Mr. KENNEDY. What? Mr. LEV. There is explanation about the same thing, again. The CHAIRMAN. All right, briefly. I do not want to deny you the right to explain it. Mr. LEV. If I were to go ahead and release this patent, or if I would give them a royalty which my competitors-which I don't trustThe CHAIRMAN. You don't trust your competitors? Mr. LEV. No, siree. The CHAIRMAN. All right, go ahead. Mr. LEV. That is about all. That is why anything on the resale, they got to buy from me. The CHAIRMAN. Let me ask you this. You are talking about a resale and they have to buy it from you. The hats and caps that are manufactured by your competitors for sale to the Government on a contract with the Government for military personnel issue, those hats, do your competitiors have to buy the materials from you? Mr. LEV. No. The CHAIRMAN. But, in those instances where they are made specifically for Government, for Government issue, to the personnel, as I understand your testimony, you have released that, you have made it free to the Government to permit your competitors to use your patent? Mr. LEV. That is correct. And the Government has got to license to give to the lowest responsive responsible bidder. The CHAIRMAN. It is released to the Government on condition that the Government shall make it competitive bidding and make the contract with the lowest responsible bidder if they use your patent? Mr. LEV. No, but they go on the outside and buy them. The Sponge Rubber Company is the one who is making them for my competitors on the Government use only. The CHAIRMAN. Well, I think we have it. Proceed. Mr. KENNEDY. Isn't it true that the inspectors are far more apt to allow one of the grommets made by your company-aren't they much more apt to pass one of the grommets made by your company than made by a competitor? Mr. LEV. No, sir. Mr. KENNEDY. If the grommet or the patent has been made in one of your offices, by the Stay-well Manufacturing Co., can't you get deviations if it not not quite correct? Mr. LEV. I am not getting deviations whatsoever. They are accepting one time-just a second. Mr. KENNEDY. Wait a moment. (Document handed to witness.) The CHAIRMAN. All right, you are presented with a photostatic copy of a telegram. Examine it and state whether you can identify it. (The witness conferred with his counsel.) Mr. LEV. I explained it yesterday in the testimony The CHAIRMAN. Just a moment. Do you recognize the telegram? Mr. LEV. I do. But I explained it yesterday, Mr. Chairman. The CHAIRMAN. Just a moment. Do you have an interest in Staywell Manufacturing Co. ? Mr. LEV. Correct. The CHAIRMAN. And you identify this telegram? Mr. LEV. That is correct. The CHAIRMAN. Then it may be made exhibit No. 70, for the record. You may read the telegram. Mr. KENNEDY (reading): To the PHILADELPHIA UNIFORM Co., Conshohocken, Pa.: Reurtel, we advise you as contractor must request deviation from contracting officer. We will guarantee approval. Signed "STAY-WELL MANUFACTURING CO., B. BLOOM." Mr. LEV. There is explanation on this one. The CHAIRMAN. For the record, the wire is dated May 10, 1954. The CHAIRMAN. All right. Mr. LEV. The deviation, what you call, that is the terms, what we call a deviation, it was mentioned at that time they wanted to havethe specification called, as much as I can remember, a gold color grommet, gold. Mr. KENNEDY. Maybe you would like to refresh your memory. Mr. LEV. A gold color grommet, and the specification called, I believe I cannot remember exactly, it is so long back The CHAIRMAN. Here is what I am interested in. How could you, your company, guarantee that the deviations would be granted if they would request, because the Government would be the one to grant the deviation. How could your company guarantee it would be done? Mr. LEV. Let me clarify this here. The CHAIRMAN. Yes. Mr. LEV. I do not remember exactly from one shade to the other. There was one of them a gold shade grommet and one of them is a grey grommet. I called up Mr. Page and told them over there, "There is a dispute on this here," and he told me that it was granted before from gold shade to grey and he cannot see the reason why that could be allowed to use. But I cannot remember exactly. But it is from gold to grey or grey to gold shade. The CHAIRMAN. Mr. Lev, whichever it was it wouldn't make any difference. What I am trying to ascertain is upon what did you base the assurance that you gave in this wire, your company gave in this wire, that you could guarantee the deviation would be approved? Upon what did you base that? Mr. LEV. I based on-first I called them up. I told them, "If you will write that letter to the effect, because it has been granted before, from gold to grey, I cannot see why it cannot be granted from grey to gold." The CHAIRMAN. But you guaranteed it. Mr. LEV. Well, I told them it. The fact is I am the one, actually, who talked to Mr. Page. But I cannot remember The CHAIRMAN. Mr. Page is in research and development? Mr. LEV. Yes, sir, and one of the finest man that any person couldThe CHAIRMAN. I have no doubt he is a fine man. Mr. Lev. He is. The CHAIRMAN. He is the man who you talked to for over an hour at a time when you called him. Mr. LEV. I did call him for the interest of the Government. The CHAIRMAN. You didn't call him for the interest of the Government? What did you say? |