Evening star. [volume] (Washington, D.C.) 1854-1972, 1944-01-09
Contracts
Continued From First Page

specified that "the expense of con-
version of the contractors facilities
to uses other than the performance
of the contract" is not to be charged
against the Government.
| Mr.. Baruch, in charge of an OWN
unit dealing with war and postwar
adjustment problems, and Mr.. Han
,ock, chairman of the Joint Contract
Termination Board, have been max
ing the contract-terminatio study
for two months. and their proposals
have the approval of the board,
made up of representatives of the
major war procurement agencies.
More Recommendation Promised.
In joint statement, they en-
phasized that their recommended
tons, to be followed by others, still
leave many phases of the complex
contract issue to be disposed of, in
Guiding the question of overall SET
Element procedure which has been
the source of controversy between
the War Department and General
Accounting Office. The present right
of contracting agencies to make final
settlements is undisturbed.
las to payment" said the state
ment in listing this among the prob
lens still to be treated our objec-
tive is quick payment of what the
Government owes so our great pro-
ductive capacity can be fully util-
lied for war and peace-destroying
the dangers of unemployment and
| imitation.
Mr.. Brynes, however, described
the accomplishments to date las an
important step toward eliminating
the delay in contractor getting
his money, and delay in an employe
getting job" r--
Profit Limit Feature.
In discussing the profit limit fea-
ture of the termination clause, the
Baruch- Hancock statement said:
Clearly, the simplicity of fat,
uniform rate of profit would yield
enormous administrative benefits in
easing problems of settlement for
both contractors and the Govern
ment. However, under certain con-
ditions, single fiat rate might give
excessive profits, as where a manu-
facturers costs consisted largely of
assembling an inventory of raw ma
terials.
Accordingly, profit formula
was devised which (a) limits the
aggregate profit in all cases to a
minimum of 6 per cent, and (b)
further limits to maximum of 2
per cent the profit on Impressed
inventory, and only to the extent
that this inventory is properly al
locable to the contract. Both these
rates OF profit are maximums and
there will be instances where only
a fraction of the per cent profit
will be allowed on raw materials.
Obviously, no profit will be allowed
except on work done or costs in
CURED.
Not-Too-Rigid Yardstick.
Eve have felt that it would con-
tribute to fair and speedy settle
nent, with protection for both the
Government and the contractor, to
set forth specified, though not
too-rigid, yardstick for measuring
profit"
Completed articles will be paid
for at the contract price.
The termination clause is applica-
BILE only to domestic contracts, and
is described as a merging of the
types heretofore used.
1--WE trust that there will be no
speculation that our release of this
termination article reflects a belief
in the early end of the war;" the
trainers said Contracts are being
terminated and settled regularly as
the needs of the war change. The
unifying and simplifying of the
Governments contracts is war
measure, as we'll as preliminary
step in preparing for demobiliza-
ton"
In explaining that the present
recommendations cover only a part
of the whole problem of contract
termination, the statement ampli-
f1es that the other points to be
covered include payments and
loans, settlement procedures, the
keeping of adequate records and
protection of the public interest,
the special problems of subcon-
tractors, appeals, company-wide
settlements, the disposal of prop
erty and the need for legislation"