Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-09-06
Contract BohIeneck
Arises 10 Jeopardize
Speedy Defense
Many Laws Beset
Efforts to Get Final
Signed Papers
BY MORGAN M. BEATTY,

BY MOkGAN M. BEATTY,
Associated Press Feature Writer.
National defense headlines renec
the fact that the program is running
head-on into the bottleneck nobody
saw-the contract bottleneck.
Industrial, transportation and raw
material bottlenecks were largely
foreseen, thanks to our World Wal
experience.
The maze Of postwar and post.
depression laws are largely re.
sponsible tor the contract bottleneck
Some of these are intended to pro.
tect public monies, others to protect
workers, and still others to step ur
taxes on excess profits.
But regardless of the cause, they
have bred into our defense program
terms highly confusing to the lay.
man-such ibid in contracts" me
gotiated contracts" letters of in
tention," contracts awarded" con.
tracts authorized" and so on.
What the Terms Mean.
Here's a glossary explaining these
terms:
Letter of intention-It usually
works like this: The Army wants to
order, say, 200 tanks costing more
than $500,000. When an order calls
for spending more than a half mil
lion. the National Defense Advisory
Commission steps in to keep it out OF
industrial bottlenecks.
The commission tells the Army
where it is possible to buy the tanks
and the Army goes ahead with the
intricate business of arranging a
contract for the tanks. Meanwhile
Congress is working on legislation
that may increase taxes on the tank
builder, or change the rate of profit
for sub-contractors
Therefore, neither the contractors
nor the sub-contractors are willing
to set a final price on the job.
Contract Assured.
So the contract is arranged right
down to the point where it is ready
to sign, but the price is left out. And
the Army gives the prospective con-
tractor a letter of intention to 20
ahead with the work as soon as
Congress passes the laws 1t Is work.
ing on, and provided a satisfactory
price agreement can be reached
Ofhcers usually regard these con-
tracts as almost certain of execution
They speak of them as lin the
works"
Contract awarded When you
read a statement from the Wal
Department that such.and.such
contracts have been awarded, you
can put it down that everything
is sealed, signed and all but deliv-
cred. Congress has appropriated the
money. the Army or Navy has agreed
to pay 1t over, and the contractor
has agreed to deliver the order on
a specified date.
Contract cleared This is a
term used exclusively by the
National Defense Advisory Com
mission. The commission itself ha.
no power to sign contracts or SPEND
money. But it does have the right
and duty to advise the contra ting
Government agency In making con.
tracts. When it has given its ADVICE
the commission announces 1t has
cleared the contract. Thus billions
in contracts may be cleared, With
out final awards from the Army OF
Navy. The term simply means as
far as the commission is concerned,
everything's o. K.
Quick Contracts.
Bid-in and negotiated contracts
The Army and Navy prefer to ex.
ecute bid-in contracts. They adver.
tise what they want, interested COM
panies bid, and the lowest respon-
sible bidder gets the contract. That
assures the Government the most
for its money.
But often, especially now, the de-
tense services are pressed from time
to time, or few commercial COM
panies are equipped to make what
they need. Gunpowder Is such ar
item. So interested companies are
asked to send negotiators to Wash.
1ngton, and the contract Is nego-
tiated quickly over the table, anc
awarded. There are very few Of
these.
Contract authorization - THAI
means Congress has authorized thu