The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1918-11-29
CANCELLATION OF
Army CONTRACTS
GETS OFFICIALS IN
SERIOUS TANGLE
War Department Arrange
ments Declared Illegal
by Comptroller
LOOSE SYSTEM
Is SHOWN UP
Subordinate Army Officers
Let Contracts Costing
Millions by Telephone
Cgy Associated Prera.l

(By Associated Press.)
washington, Nov. 29.-Goyeru-
ment war contracts involving atIn-
| dreds Of millions of dollars were rer-
dered doubtful in status today by q
ueclsion or Comptroller Warwick of
the treasury that orders have not
oeen legally executed unless actually
signed ny responsible government
contracting agents and the contrac-
tor.
Must Have Authorization.
The war department submitted 10
| Inc comptroller n form OF canceIia-
tlon agreement under which ii was
proposed TO abandon, without I'M
just loss TO contractors, thousands
| or war supply contracts. He refused
TO approve the agreement. holding
mat the department may not agree
with contractor on an arbitrary
sum TO cover liabilities unless specf-
nc authorization for this is given in
previously existing contract.
Legislation Necessary.
A Large proportion OF war orders
were given informally by telephone.
telegraph or letter, it is said. In
Such cases the comptroller held new
legislation will be necessary to per.
NIT framing of agreements for cam
collation..
Was Loosely Done.
In the confusion and haste of war
many manufacturers proceeded with
tremenduous orders on teleerapf1i.
instructions of subordinate army of
ilcers and the termination of hos
tilltles found them unprotected by a.
regal contract. The authority of the
controller, who has rendered their
position questionable, grows out OF
his supervision OF all payments bv
the treasury on order of other de-
partments
Must Keep Labor Busy.
lr submitting the tentative form
Tor a standard cancellation contract
Secretary Baker explained that 4sif
Is important In the interest of labor
and the industrial security OF the
country that these plants Creferring
mainly to munition factories) be re-
turned to commercial work as speed
ny as practicable and so far as pos-
slbie without a break in their c8n--
tlnuouS operation and employment of
labor" Secretary Baker continued.
Allows 10 Per Cent For Profit.
The war department believes that
many such contractors are willing to
forego the prospective profits on the
remainder of the work contemplated
py the contract and terminate the
existing contract on a basis which
would amount substantially to COM
pensation for expenditures incurred
and profits not to exceed ten per cent
on the cost of the unfinished articles
on hand-a basis more favorable TO
the government than the terms of the
contract would pernit--if they can
secure promptly substantial pur-
tion Of this sum so as to release their
working capital for switching back
to commercial work.
Contractors Have Best OF IL.
"The department therefore desires
to enter into supplementary contracts
with such contractors bySwIich q sum
well within what it is certain would
have to be paid by the government on
such basis of adjustment will be paid
Immediately to the contractor upon
his consent to a termination OF the
original contract and a release TO the
government from all It's obligations
Hereunder. the department agreeing
to pay substantially such additional
sum as the secretary of war may
determine VIII complete payment 10
the contractor on such basis of ad-
justment."
Blanket Forms Cannot Cover.
%>OA14ptAOllcA w f14 w ANFhF kiGiug AAtnL
blanket form of contract could be de-
yised to cover all cancellations, He
declared that cases involving only
equitable claims cannot be settled by
legislative officers without new leg
islation.
Situation Tangled.
When original contracts contained
no terminating clause. the decision
infers that it is doubtful whether a
new contract could be made allowing
more than actual cost Of materials on
hand less their salvage value. In 9TH
er words, 1t lis questionable whether
allowance could be made for a profit
growing out of the cancellation.
Officers Without Authority.
Furthermore, the decision set forth,
an army officer with responsibility
for negotiating contracts has no legal
power to decide on a sum to which p
contractor is entitled for cancellation
OF an order, evan though this sum iS
agreed upon with the contractor.