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Chapter VI

Books and Documents > Medical Department of the U.S. Army in the World War, Volume III, Finance & Supply

CHAPTER VI

CONTRACTS

AUTHORITY TO MAKE CONTRACTS

By legislative enactment the Secretary of War is the source of all authority to make contracts or purchases in all branches of the military establishment.1 It was foreseen when this authority was conferred upon the Secretary that he would be unable personally to supervise the making of the vast number of contracts and must delegate the authority to subordinates in the War Department. Accordingly, it was provided that all purchases and contracts for supplies and services for the military service were to be made by or under his direction. Under the authority conferred upon the Surgeon General to procure medical supplies,2 the actual making of contracts and purchases thereafter was done by representatives of the Surgeon General.3 The variety and number of articles on the standard supply table increased in accordance with the development of the medical sciences, but the authority to procure remained in the Medical Department otherwise unchanged until November, 1918, when all procurement activities were consolidated under the Director of Purchase and Storage.4
 
The legislative enactments particularly applicable to the procurement of supplies and services not personal for the Military Establishment require that no contract or purchase on behalf of the United States be made unless it be authorized by law or made under an appropriation adequate to its fulfillment, except for clothing, subsistence, forage, fuel, quarters, transportation, or medical and hospital supplies;5 that, except in cases of emergency or where competition is impracticable, the purchase of all supplies for the various departments and branches of the Army be made only after advertisement, where the articles can be had the cheapest, quality, cost of transportation, and the interests of the Government considered;6 that such purchases, except in case of emergency, be made by contract;7 that the award in every case be made to the lowest responsible bidder for the best and most suitable article;7 that purchase of supplies and procurement of nonpersonal services may be made in open market, in the manner common among business men, when the aggregate does not exceed $500;8 and that all open-market purchases he reported to the Secretary of War for approval under regulations prescribed by him whenever the amount exceeds $100.9 It has been held by the Attorney General that this legislation contemplates one general mode of purchase, namely, by contract, after advertisement, with  the lowest responsible bidder for the best and most suitable article, with but a single exception, and that is where an emergency exists requiring the purchase to be otherwise made.


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FORMS OF CONTRACT

It is mandatory for the War Department that all contracts not especially excepted therefrom by act of Congress be formal contracts in writing, and signed by the contracting parties with their names at the end thereof. This is the form usually meant when the term contract is used, and so used in this volume.

The term informal contract is applied to the forms of agreement less formal than those included under the term formal contract. Usually these forms of agreement are written proposals and written acceptances, or verbal agreements where the delivery of the article or rendering of service is immediate. Written proposals are usually replies by letter to, or by indorsement on, a request from a purchasing officer to a manufacturer or vendor for a price on the articles stated in the request. The written acceptance is usually the written purchase order; that is, a specific request to the vendor to deliver to the purchasing officer at a particular place the articles and at the prices specified in the order. Verbal agreements are usually telephonic requests for the immediate delivery of some particular article where time is an important element in the consideration. The conditions under which these two forms of contracts may he used by the Medical Department are stated in the following legislation.10

Hereafter, whenever contracts which are not to be performed within sixty days are made on behalf of the Government by the Surgeon General or by officers of the Medical Department authorized to make them, and in excess of $500 in amount, such contracts shall be reduced to writing and signed by the contracting parties, but in all other cases contracts shall be prepared under such regulations as may be prescribed by the Surgeon General.

The form of the purchase order or informal contract had never been specifically prescribed by the Surgeon General. Definite forms of purchase orders were in general use at the several medical supply depots when the act was passed authorizing the Surgeon General to prescribe them.10 The forms then in use had been the result of years of experience and were believed to be those most convenient for the individual depot, consequently they were continued in use without change. While the form of these orders at the several depots differed in minor details, they all contained the essential stipulations, such as the articles and quantities ordered, the prices to be paid, the place of delivery, the authority for the purchase, and the manner of packing when it was necessary to prescribe it.

The standard formal contract was of much greater importance and the form of that instrument was carefully considered and prescribed by the Surgeon General, with the approval of the Secretary of War arid the Comptroller of the Treasury. The form of the contract was kept as simple and the stipulations as few as possible consistent with effectiveness. The form was printed on thin paper so that the required number of copies could be made at one time on the typewriter. The same form was used without change for all purchases made until about July, 1918, except for the purchase of surgical dressings in the summer of 1917, for which a special form was used. The form of the contract appears below.


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Form 41

These articles of agreement, entered into this................. day of................... ,nineteen hundred and ....................... , between ..................................... United States Army, hereinafter designated as the contracting officer, acting for and on behalf of the United States of America, of the first part, and 1 ......................................,   of the city of................................. ,  county of.............................. , State of..................................hereinafter designated as the contractor, of the second part, witness, that the said parties do mutually agree, to and with each other, as follows:

ARTICLE I. That the said contractor shall furnish and deliver, free of all extra charges whatsoever, to the Medical Department of the United States Army, at ........................ the articles below enumerated, at the prices herein stated, viz:

        *                            *                            *                            *                            *          

ARTICLE II. That all articles herein contracted for, for the preparation of which instructions are provided by the U. S. Pharmacopoeia, latest edition, shall be made in accordance therewith, and be equal to the standard thereby established, and that all other articles shall be of the best grades on the market, unless otherwise specified, and be equal to the original samples furnished or the specifications, as the case may he, upon which this contract is based.

ARTICLE III. That before delivering the articles aforesaid the contractor shall put them up securely in the necessary bottles, cartons, tins, boxes, crates, sacks, and other like containers and coverings, and pack them suitably for Army transportation and storage in such packing cases as may be required by the contracting officer or his authorized successors. The said contractor shall furnish the said packing cases in every instance, and the said containers except as otherwise specified in Article I. The said packing cases and containers so furnished by said contractor are to be new and of uniform and appropriate make and size as determined by said contracting officer or his successors. The contractor shall plainly mark his name and the contents on each packing case and affix a label showing his name and the contents on each bottle, carton, tin, box, etc., so packed as aforesaid. The prices enumerated in Article I of this contract shall be full compensation for the services rendered and the packing cases, containers, and labels furnished under the stipulations of this article, and no extra charge therefor shall be made or allowed.

ARTICLE IV. That the quantities hereinbefore specified, in the case of all or any of the articles aforesaid, may, at the option of the United States, be increased or diminished not exceeding 2 ..................................per cent thereof, upon notice of such increase or decrease served upon the contractor by the contracting officer or his authorized successors at any time not less than...................................days before the date set for the completion of this contract.

ARTICLE V. That deliveries under this contract shall commence within............................. days after the date of its approval, of which timely notice shall be given to the contractor, and shall be completed..................

ARTICLE VI. That the articles furnished and delivered hereunder, including packings and containers, shall be examined and inspected without unnecessary delay by a person or persons to be designated by the United States, and if found equal to the........................................ shall be accepted and become the property of the United States. The said examination may, at the option of the United States, be made by means of samples selected at random from lots delivered. If any of the articles shall be found on said examination to be not equal to the quality herein stipulated for they shall be rejected, and the contractor shall remove them from the premises within ten days after notice thereof.

ARTICLE VII. That payments under this contract shall be made to the contractor as soon as practicable after the delivery and acceptance of the articles aforesaid.
_____________________________________________________

1 Insert here the legal name of the principal intended to be bound as party of the second part if an individual, his personal name, with one given name in full; if a firm, the personal names of all the partners, with the recitation than they are partners, and compose the firm, naming it by its usual firm name; if a corporation, the corporate name, reciting that the party is a corporation, and naming the State where it was incorporated.
2 This stipulation can be made in contracts under advertisement in which the right so to do is expressly reserved, and in open-market contracts. In other cases the blank space should not be filled in.


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ARTICLE VIII. That in case of failure of the contractor to fulfill the stipulations of this contract according to their true intent and meaning, the contracting officer or such other officer as may be designated by proper authority may cause the services to be performed and the articles to be furnished by any other person or persons, in open market without advertising therefor or otherwise, and the said contractor shall pay to the United States the additional cost or expense thus incurred.

ARTICLE IX. The contractor further agrees to hold and save the United States, their officers and agents, harmless from and against all and every demand or demands, of any nature or kind, for or on account of the use of any patented invention, article, or process, included in the articles hereby agreed to be furnished and the work to be done under this contract.

ARTICLE X. Neither this contract nor any interest therein shall be transferred any to other party or parties, and in case of such transfer the United States may refuse to carry out this contract, either with the transferor or the transferee, but all rights of action for any breach of this contract by the contractor are reserved to the United States.

ARTICLE XI. No Member of or Delegate to Congress, nor any person belonging to or employed in the military service of the United States, is or shall be admitted to any share or part of this contract, or to any benefit which may arise herefrom..................................................................

ARTICLE XII. This contract shall be subject to the approval of the Surgeon General, U. S. Army.

ARTICLE XIII. The erasures and interlineations hereinbelow specified were made in this instrument before the signatures of the contracting parties were affixed hereto, to wit: Line....................................................

In witness whereof the parties aforesaid have hereunto placed their hands the date first hereinbefore written.

Witnesses                                                            Principals:
.................................................................... as to..........................................................................................
....................................................................as to............................................................................, U.S. Army.
....................................................................as to...........................................................................................
....................................................................as to...........................................................................................
....................................................................as to...........................................................................................
                                                     (Execute in triplicate)   

AFFIDAVIT4

I do solemnly swear that the copy of contract hereto annexed is an exact copy of a contract made by me personally with...........................; that I made the same fairly without any benefit or advantage to myself, or allowing any such benefit or advantge corruptly to the said ...................................., or any other person; and that papers accompanying include all those relating to the said contract, as required by state in such case made and provided.

......................................................................................
...................................................................., U.S. Army.
Subscribed and sworn to before me this .........................................day of ...................................., 19..............................
...........................................................................
...........................................................................
                         
CERTIFICATE  5

  I certify that the award of the foregoing contract was made to the lowest responsible bidder for the best and most suitable articles and service, on proposals received in response to advertisement which was published for ..............................................days by poster and circular letter dated ..............................................
..............................................................................................
.............................................................................. U.S. Army,
                                                                              Contracting Officer
_________________________________________________

4 This affidavit is required only on the copy of contract for the returns office, Department of the Interior.
5 When the contract is entered into upon award on proposals received in response to a public advertisement this certificate will be given by the contracting officer on the two original numbers of the contract for the Surgeon General and the Auditor for the War Department.


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Certificate6

I certify that this contract was entered into in open market, without previous advertisement, that course being necessary because..........
                   ........................
         ....................................................,U.S. Army
               Contracting officer

NOTES
NOTE A. Three original numbers of this contract are to be executed, and two copies made, for disposition am prescribed in Army Regulations.
NOTE B. Erasures, iterlineations or other irregularities in this instrument must be explained over the signatures of the parties thereto.

THIS CONTRACT NEED NOT BE EXECUTED UNDER SEAL

The general arrangement of the form and the stipulations quoted above had remained unchanged for many years. It had demonstrated its effectiveness by long usage. It had proved entirely satisfactory to the Medical Department and, so far as can be determined, was equally acceptable to the accounting officers of the Treasury. Early in 1918 supervisory bodies began to be placed over the supply bureaus of the War Department. Consolidation of procurement became the accepted policy of the War Department. As the consolidation proceeded, additional supervisory bodies were added in increasing numbers. Change was in the air, and it was inevitable that change should extend to contract forms. Stipulations were added and some of the original stipulations modified. The contract form became longer and more voluminous. In September the following stipulations were added and modifications made to the form above quoted:11

cases and container so furnished by said contractor are to be new, and of uniform and appropriate make and size as determined by said contracting officer or his successors. The contractor shall plainly mark his name and the contents on each packing case, and affix a label showing his name and the contents on each bottle, carton, tin, box, etc., so packed as aforesaid. The prices enumerated in Article I of this contract shall be full compensation for the services rendered, and the packing cases, containers, and labels furnished, under the stipulations of this article, and no extra charge therefor shall be made or allowed.

ARTICLE IV. That the quantities hereinbefore specified, in the case of all or any of the articles aforesaid, may, at the option of the United States, be increased or diminished not exceeding .............................. per cent thereof, upon notice of such increase or decrease served upon the contractor by the contracting officer or his authorized successors at any time not less than ................................. days before the date set for the completion of this contract.
 
  ARTICLE V. That deliveries under this contract shall ..............................commence within days after the date of its approval, of which timely notice shall be given to the
contractor, and shall be completed...........................................

ARTICLE VI. The articles or work are subject to observation, inspection, and tests by the United States at any and all times during manufacture or performance in order to determine their compliance with the requirements of this contract, and are subject to acceptance or rejection by the United States at ............................... For these purposes the United States may maintain an inspector or inspectors at the plants or places where and during the time this contract is being performed. Such inspectors may reject any and all articles or work, or components thereof, and materials found not to be in compliance with the requirements of this contract. No preliminary test or acceptance shall preclude the
______________

6 When the contract is entered into in open market this certificate will be given in lieu of the preceding.


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United States from rejecting any articles or work upon final inspection or test at completion. The contractor shall furnish all reasonable facilities and assistance requested by such inspectors for the performance of their duties. Inspections and tests by the United States shall be carried out in such a mannier as not unduly to delay the performance of this contract by the contractor. Nothing contained in this article shall limit or annul any inspection or test which may be called for by the drawings and specifications and forming a part of this Contract. No inspection, acceptance, or payment under this contract shall deprive the United States of any claim against the contractor hereunder by reason of fraud or deception, or by reason of latently defective articles, materials, or workmanship.   

ARTICLE VII. That payment under this contract shall be made to the contractor as soon as practicable after the delivery and acceptance of the articles aforesaid.

ARTICLE VIII. That in case of failure of the contractor to fulfill the stipulations of this contract according to their true intent and meaning, the contracting officer or such other officer as may be designated by proper authority may cause the services to be performed and the articles to be furnished by any other person or persons, in opens market without advertising therefore or otherwise, and the said contractor shall pay to the United States the additional cost or expense thus incurred.

ARTICLE IX. The contractor agrees to hold and save the United States and its representatives harmless against all liability and damage arising by reason of the infringement or alleged infringement of letters patent of the United States relating to the articles or work herein contracted for which are owned or controlled either by assignment, license, or otherwise, by the contractor, its officers or employees, or persons in privity with the contractor, and by reason of the infringement or alleged infringement of letters patent of the United States which cover or relate to any materials, parts, or processes of manufacture not specifically prescribed by the United States for the performance of this contract. The United States agrees to hold and save the contractor and its representatives harmless against all liability and damage arising by reason of the infringement or alleged infringement of letters patent of the United States relating to the articles or work her, in contracted for which are not owned or controlled, either by assignment, license, or otherwise, by the contractor, its officers or employees, or persons in privity with the contractor, and which cover materials, parts, or processes of manufacture specifically prescribed by the United States for the performance of this contract: Provided, Immediate notice of any claim of infringement or of any legal proceedings in connection therewith is given in writing by the contractor to the chief of the bureau; And provided further, That the United States is permitted to intervene in any such claim or proceeding and in its discretion to defend the same or to make settlement thereof, in which events the contractor shall furnish all information and assistance requested by the United States.

ARTICLE X. Neither this contract, nor any interest herein, shall be transferred by the contractor to any other party, except to the extent permitted by section 3477, United States Revised Statutes.

ARTICLE XI. No Member of or Delegate to Congress, or Resident Commissioner, is or shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this article shall not apply to this contract so far as it may be within the operation or exceptions of sections 116 of the act of Congress approved March 4, 1909 (35 Stats. 1109).

ARTICLE XII. No contract shall be made by the contractor with any other persons for furnishing any of the completed or substantially completed articles or work herein contracted for, without the written approval of the contracting officer. Every contract and subcontract made by the contractor in contemplation of or in connection with the performance of this contract shall state that it relates to this contract and shall contain a provision that its unperformed portion may he assigned at any time by the contractor to the United States, or its nominee.

ARTICLE XIII. The contractor expressly warrants that it has employed no third person to solicit or obtain this contract in its behalf, or to cause or procure the same to be obtained upon compensation in any way contingent, in whole or in part, upon such procurement;


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and that it has not paid, or promised or agreed to pay, to any third person, in consideration of such procurement, or in compensation for services in connection therewith, any brokerage, commission, or percentage upon the amount receivable by it hereunder; and that it has not, in estimating the contract price or compensation demanded by it, included any sum by reason of any such brokerage, commission, or percentage; and that all moneys payable to it hereunder are free from obligations to any other person for services rendered, or supposed to have been rendered, in the procurement of this contract. The contractor further agrees that any breach of this warranty shall constitute adequate cause for the annulment of this contract by the United States, and that the United States may retain to its own use from any sums due or to become due hereunder an amount equal to any brokerage, commission, or percentage so paid or agreed to be paid.

ARTICLE XIV. The contractor shall take all reasonable precautions for the protection of the plant and property to be used in the performance of this contract and the work in progress hereunder, against espionage, fire, explosion, acts of war, and acts of enemy aliens, and shall provide such additional watchmen and devices, and adopt such particular measure for the protection of such plant, property, and work as the contracting officer shall from time to time direct. The contractor shall, when required, report to the contracting officer the citizenship, country of birth, or alien status of any or all of its employees. When required by the contracting officer, the contractor shall refuse to employ, or if already employed, shall forthwith discharge from employment and exclude from its plants, any person or persons designated by the contracting officer, for cause, as undesirable for employment in a plant engaged in work for the United States. Failure to comply with any or all of the provisions of this article shall render the contractor responsible for all loss or damage to the United States arising from any of the hazards herein sought to be guarded against and shall also be cause for the cancellation of this contract. The United States shall pay to the contractor as an addition to the contract price or compensation, or as part of the cost of the articles or work herein contracted for, any additional expense incurred by the contractor, which, in the opinion of the contracting officer, is an additional expense created by the enforcement of this article and resulting from action taken by the contractor beyond or in addition to said above-mentioned reasonable precautions.

ARTICLE XV. Except as otherwise specifically provided in this contract, any claims, doubts, or disputes which may arise under this contract, or as to its performance or nonperformance, and which are not disposed of by mutual agreement, may be determined, upon petition of the contractor, by the Secretary of War or his duly authorized representative or representatives. If the Secretary of War selects a board as his authorized representative to hear and determine any such claims, doubts, or disputes, the decision of the majority of said board shall be deemed to be the decision of the board. The decision of the Secretary of War or of suchs duly authorized representative or representatives shall be final and conclusive on all matters submitted for determination: Provided, That where the decision is rendered by such representative or representatives, the Secretary of War, may, at his option, either upon his own motion or upon petition filed with him by the contractor within 20 days after notice of the decision of such duly authorized representative or representatives has been served upon him, review the action of such representative or representatives and render his decisions thereon. Any sum or sums allowed to the contractor under the provisions of this article shall be paid by the United States as part of the cost of the articles or work herein contracted for and shall be deemed to be within the compensation of this contract.

ARTICLE XVI. In the event that labor disputes shall arise directly affecting the performance of this contract and causing or likely to cause any delay in making the deliveries, and the Secretary of War or his representative shall have requested the contractor to submit such disputes for settlement, the contractor shall have the right to submit such disputes to the Secretary of War for settlement. The Secretary of War may thereupon settle or cause to be settled such disputes, and the parties hereto agree to accede to and to comply with all the terms of such settlement.

If the contractor is thereby required to pay labor costs higher than those prevailing in the performance of this contract immediately prior to such settlement, the Secretary of War or such representative in making such settlement and as a part thereof may direct that a


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fair and just addition to the contract price shall be made therefor: Provided, however, That the Secretary of War or his representative shall certify that the contractor has in all respects lived up to the terms and conditions of the contract or shall waive in writing for this purpose only any breach that may have occurred.

If such settlement reduces such labor cost to the contractor, the Secretary of War or his representative may direct that a fair and just deduction be made from the contract price.

No claim for addition shall be made unless the increase was ordered in writing by the Secretary of War or his duly authorized representative and such addition to the contract price was directed as part of the settlement.

Every decision or determination made under this article by the Secretary of War or his duly authorized representative shall be final and binding upon the parties hereto.
   
ARTICLE XVII. All work required in carrying out this contract shall be performed in full compliance with the laws of the State, Territory, or District of Columbia where such labor is performed: Provided, That the contractor shall not employ in the performance of this contract any minor under the age of 14 years or permit any minor between the ages of 14 and 16 years to work more than eight hours in any one day, more than six days in any one week, or before 6 a.m. or after 7 p.m. Nor shall the contractor directly or indirectly employ any person undergoing sentence of imprisonment at hard labor which may have been imposed by a court of any State, Territory, or municipality having criminal jurisdiction: Provided, however, That the President of the United States may by Executive order modify this provision with respect to the employment of convict labor and provide the terms and conditions upon which such labor may be employed. These provisions shall be of the essence of the contract.

ARTICLE XVIII. The contractor shall from time to time, and whenever so requested, furnish to the chief of the bureau or to such person as the chief of the bureau may designate statements and reports on the progress of the performance of this contract and full information on all factors relating to deliveries or performance hereunder. Representatives of the United States shall have the privilege of visiting all offices and plants of the contractor for the purpose of ascertaining the progress of the performance of this contract under regulations prescribed by the chief of the bureau.

Any notice to the contractor under this contract, when not actually delivered in writing to the contractor, shall be deemed to have been sufficiently given when mailed in a sealed, post-paid wrapper addressed to the contractor at the address above set forth. Any notice to the United States under this contract, when not actually delivered in writing to the chief of the bureau, shall be deemed to have been sufficiently given when mailed in a sealed, post-paid wrapper addressed to the chief of the bureau, War Department, Washington, D. C.

ARTICLE XIX. This contract shall be subject to the approval of the Surgeon General, U. S. Army.

ARTICLE XX. The erasures and interlineations herein below specified were made in this instrument before the signature of the contracting parties were affixed hereto, to wit: Line
........................................................... witness whereof the parties aforesaid have herunto placed their hands the date first herinbefore written.

Witnesses:                                                           Principals:
.............................................................as to.....................................................................................
                                                                    .....................................................................U.S. Army
............................................................as to.......................................................................................
............................................................as to.......................................................................................
............................................................as to.......................................................................................

                                    ( Execute in triplicate)

   This form of contract was used in the purchase of supplies only.  For other needs the Medical Department had special forms of contracts.  There


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were special forms for laundry work,12 for services as a nurse,13 with a private physician,14 and with an acting dental surgeon.15 Civilian employees, hired for the service of hospitals and supply depots, for the most part were given a form of appointment but were not required to sign a formal agreement.

In the spring of 1917 a form of contract based on the cost of manufacture of the articles or the performance of the work, plus a reasonable profit to the manufacturer, was favored but not specifically ordered by the Secretary of War in the procurement of supplies for the Military Establishment. This form was also favored by the Council of National Defense. It was contemplated that the actual cost of production, raw materials, and labor, etc., would be paid the contractor for the articles furnished and to this cost would be added a profit of 10 per cent. Theoretically the principles upon which it was based were sound if properly applied and if surrounded with sufficient safeguards. It assumed that the contractor would use his best endeavors to keep his costs at the minimum consistent with efficiency inasmuch as he was assured of a fair profit and relieved of all risk. Many of the contractors were undertaking work with which they were unfamiliar and were without experience upon which to calculate their costs. The transformation of their plants and processes would be expensive, and it appeared just that these expenses be borne by the Government and included in the cost of the articles. A definite profit in the transaction was assured them, and the hope of gain which is so essential to any business venture was not withheld. The cost-plus contract, then, appeared to be fully justified and worthy of general use. It filled a large place in the procurement of supplies during the war. The abuses to which it was soon to be subjected brought it into general disrepute, its use became less general during the early part of 1918, and was discontinued August 1, 1918, except for very special cases.16

The manufacturers of surgical dressings saw, when the vast quantities of surgical dressings required by the Medical Departments of the Army and Navy were presented to them, that they were to embark upon a production schedule far beyond anything previously attempted or even conceived. Additional facilities would be required and personnel must be greatly augmented. They were sensitive to the charge of profiteering and desired to be absolved from the criticism of high prices for the articles which they were to furnish. The cost-plus form of contract appeared to accomplish this end, to assure the Government the supplies at a reasonable cost and the manufacturers a reasonable profit. The proposal for this form of contract was taken up with the Council of National Defense. By cooperation of the legal and accountancy sections of the council, the representatives of the manufacturers and their attorneys, and the Surgeon General s Office, a form of cost-plus contract was evolved which amply protected the Government and the manufacturer and which stood the acid test of experience. The safeguards with which it was surrounded proved effectual. Because of difficulties in accountancy and for various other reasons, this form of contract fell into disuse when subsequent contracts were made for surgical dressings. By the time deliveries on the first contracts had been completed and it became necessary to purchase additional surgical dressings, the cost of production in the several plants was sufficiently well known to the Surgeon General s Office to


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judge whether subsequent bids were reasonable. The fixed-price contract was thereupon resumed for all purchases, but many of them contained provisions for adjustment of price to cover advances in cost of material and labor. There were two variations in the form of the cost-plus contract to adapt its provisions to the requirements of different manufacturing establishments for accountancy purposes. In general this contract conformed to the following:17

These articles of agreement entered into this 23d day of June, nineteen hundred and seventeen (XVII), between C. R. Darnall, Lieut. Colonel, Medical Corps, United States Army, hereinafter designated as the contracting officer, acting for and on behalf of the United States of America, of the first part, and Johnson and Johnson, a corporation under the laws of the State of New Jersey, of the city of New Brunswick, county of Middlesex, State of New Jersey, hereinafter designated as the contractor, of the second part.

Witnesseth:  That the said parties do mutually agree to and with each other, as follows:

ARTICLE I. The contractor shall furnish and deliver to the contracting officer, free of all extra charges whatsoever (except as hsereinafter stated), f. o. b. contractor s works, and the contracting officer acting for and on behalf of these United States agrees to purchase at these prices and subject to the stipulations and conditions herein set forth, the articles enumerated below, at the prices stated in the following schedule. The contractor, if requested by the contracting officer, will make delivery at points other than the contractor s works, and any additional cost of such delivery to such other points, such as freight, cartage, or other special charges, shall be paid by the contractor (unless the contracting officer shall otherwise provide) and shall be reimbursed to the contractor.

SCHEDULE OF ARTICLES, PRICES, QUANTITIES, AND DELIVERIES

Two hundred and fifty thousand (250,000) gross bandages, gauze, compressed, as per specifications, a copy attached hereto which is hereby made part of this contract, at $6.56 per gross (six dollars and fifty-six cents per gross).

Delivery:  30,000 gross to be delivered in 4 months from date of approval of contract in monthly shipments of proportionate quantities, balance in one year.

Twenty-one million five hundred thousand (21,500,000) packages gauze, absorbent, sublimated, 2 half-yard lengths in package, as per specifications, a copy attached hereto which is hereby made part of this contract, at $72.08 per 1,000 (seventy-two dollars and eight cents per thousand).
Delivery: 1,500,000 packages to be delivered in 4 months from date of approval of contract in monthly shipments of proportionate quantities, balance in one year.

Five hundred thousand (500,000) cartons sponges, gauze, compressed, 12 in carton, as per specifications, a copy attached hereto which is hereby made part of this contract, at $45.89 per 1,000 cartons (12 in carton) (forty-five dollars and eighty-nine cents per thousand cartons).

Delivery:  100,000 to be delivered in 4 months from date of approval of contract in monthly shipments of proportionate quantities, balance in one year.

Eight million five hundred thousand (8,500,000) packages cotton, absorbent, sterilized, in 1-oz. packages, as per specifications, a copy attached hereto which is hereby made part of this contract, at $37.76 (thirty-seven dollars aNd seventy-six cents) per thousand cartons.

Delivery:  750,000 pkgs. to be delivered in 4 months from date of approval of contract in monthly shipments of proportionate quantities, balance in one year.

Three hundred sixty thousand (360,000) spools plaster, adhesive, zinc-oxide, one inch by 5 yards, each spool in carton, at $1.02 per dozen (one dollar and two cents per dozen) or $85.00 (eighty-five dollars) per thousand.

Delivery:   85,000 spools to be delivered in 4 months from date of approval of contract in monthly shipments of proportionate quantities, balance in one year.

The prices aforesaid, all and singular, will be revised every three months at the request of either party (the first revision, if any, to be made on or about ..............................and in the event of such revision said prices shall be decreased or increased for the three


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months next ensuing, by subtracting therefrom or adding thereto the decrease or increase, if any, its the cost of such material and/or of such labor as defined in paragraphs 1 and 2 hereunder.

The contractor guarantees that the prices fixed herein shall not exceed the sums of the four following items:

(1)  Cost of material definitely ascertainable as devoted exclusively to said articles:
            The basis of cost of raw cotton used shall be 20.70 per pound.
            The cost of gray goods used shall be:
                36-inch, 44 x 40, weight 8.5 yards per pound, 5 5/8 c. per yd.
                38 ½ inch, 44 x 40, weight 8.2 yards per pound, 5 7/8 c. per yd.
                40-inch, 44 x 40, weight 8.0 yards per pound, 6 1/16 c. per yd.
                36-inch, 32 x 28, weight 13.0 yards per pound, 3 7/8 c. per yd.
                36-inch, 28 x 24, weight 15.0 yards per pound, 3 ½. per yd.
                36-inch, 24 x 20, weight 17.0 yards per pound, 3c. per yd.
                36-inch, 20 x 16, weight 21.0 yards per pound, 2 ½c. per yd.
                36-inchs, 56 x 56, weight 4.25 yards per pound, 9 ¾ c. per yd.
                36-inch, 22 x 18, weight 19.0 yards per pound, 2 ¾ c. per yd.
(2) Cost of direct labor applied to said articles by the contractor, meaning thereby cost of labor definitely ascertainable as devoted exclusively to said articles.
(3) Nineteen (19) per cent of the sum of (1) plus (2) which percentage is herein referred to as the specified overhead percentage--to cover indirect costs, overhead, and burdens, such as a proper allowance for depreciation and amortization, rent, interest at the rate of 6 per cent on the value of the plant, equipment, and inventories, and all expenses except those incurred for advertising, selling, credit losses, customers discounts, and collections, and except income, profits, franchise, and capital-stock taxes; and the contractor guarantees that the specified overhead percentage does not exceed the percentage which the total expenses of the kinds comprised in (3) bear to the total costs comprised in (1) plus (2) in the total business of the contractor its articles of the general kind and character specified in this contract for the fiscal year preceding the date of the executions of this contract.
(4) Ten per cent of the sum of (1) plus (2) plus (3).

As the experience of the contractor in regard to indirect costs, overhead, and burdens while manufacturing the articles furnished hereunder may differ from the rate per cent specified its paragraphs (3), and there defused as the specified overhead percentage, it is agreed that the actual overhead percentage of the contractor in manufacturing the articles to be furnished under this contract shall be taken as the ratio which the total expenses of the kinds comprised in (3) bear to the total costs comprised in (1) plus (2) in the total business of the contractor in articles of the general kind and character specified in this contract for the fiscal period beginning on July 1, 1917, and ending on the inventory or fiscal closing date next subsequent to the conclusion of the manufacture of articles to he furnished under this contract; and that if the actual overhead percentage shall fall below 95 per cent of the specified overhead percentage, an adjustment and decrease of compensation of the contractor shall be made by calculating the prices of the articles furnished hereunder including the actual overhead percentage on the sum of (1) plus (2), in lieu of the specified overhead percentage, and 10 per cent on that sum. The difference between the amounts calculated at the two prices shall be credited or refunded to the United States, except that the contractor shall be allowed as compensation, in addition to all other compensations herein provided for, the following proportion of the amount here provided to be credited or refunded to the United States: If the actual overhead percentage is less than 95 per cent of the specified overhead percentage, the contractor shall be allowed 25 per cent of the difference; if the actual overhead percentage is less than 90 per cent of the specified overhead percentage, the contractor shall be allowed 30 per cent of the difference; if the actual overhead percentage is less than 85 per cent of the specified overhead percentage, the contractor shall be allowed 35 per cent of the difference; if the actual overhead percentage is less than 80 per cent of the specified overhead percentage, the contractor shall be allowed 40 per cent of the difference; if the actual overhead percentage is less than 75 per cent of the specified overhead percentage, the contractor shall be allowed 45 per cent of the difference; if the actual overhead percentage is less than 70


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per cent of the specified overhead percentage, the contractor shall be allowed 50 per cent of the difference.

For example, taking the specified overhead percentage as 20 percent, the following would be the schedule:
   
Actual overhead percentage:                                                                   Percentage of different in price, to which contractor would be entitled
    Less than 19% but not less than 18 %................................................................   25%
    Less that 18%, but not less than 17%.................................................................   30%
    Less than 17%, but not less than  16%...............................................................   35%
    Less than 16%, but not less than 15%................................................................   40%
    Less than 15%, but not less than 14%................................................................   45%
    Less than 14%..................................................................................................    50%

   In making any investigation or verification as to costs, overhead expenses, outlays, or profits, the Surgeon General of the United States Army may employ a public accountant or accountants to be designated by him. The fees, if any, of such accountants shall, at the option of the contracting officer, be paid by the contractor and reimbursed to him as an extra charge.

The accounts and records and all original entries, vouchers, and supporting papers shall be preserved for a period of two years after the completion or cessation of work under this contract and shall be open at all reasonable times to the contracting officer or the Compensation Revision Board or other representative of the Council of National Defense. All information obtained from the contractor s accounts and records shall be treated as confidential.

ARTICLE II. That all articles herein contracted for, for the preparation of which instructions are provided by the U. S. Pharmacopoeia, latest edition, shall be made in accordance therewith, and be equal to the standard thereby established, and that all other articles shall be of the best grades on the market, unless otherwise specified, and be equal to the original samples furnished, or the specifications, as the case may be, upon which this contract is based.

ARTICLE III. That before delivering the articles aforesaid, the contractor shall put them up securely in the necessary bottles, cartons, tins, boxes, crates, sacks, and other like containers and coverings, and pack them suitably for Army transportation and storage in such packing cases as may be required by the contracting officer or his authorized successors. The said contractor shall furnish the said packing cases in every instance, and the containers except as otherwise specified in Article I. The said packing cases and containers so furnished by said contractor are to be new, and of uniform and appropriate make and size as determined by said contracting officer or his successors. The contractor shall plainly mark his name and the contents on each packing ease, and affix a label showing his name and the contents on each bottle, carton, tin, box, etc., so packed as aforesaid. The prices enumerated in Article I of this contract shall be full compensation for the services rendered, and the packing cases, containers, and labels furnished, under the stipulations of this article, and no extra charge therefor shall be made or allowed.

ARTICLE IV. Unless prevented by strikes or circumstances beyond the control of the contractor, deliveries under this contract shall commence within thirty days or earlier, if possible, after notice to the contractor of the approval of this contract, and shall be completed according to the foregoing schedule of quantities and deliveries, which are estimated but not guaranteed by the contractor, but which the contractor shall use its best efforts to accomplish, giving the preference in its plant or plants to work hereunder or under similar contracts for the United States of America.

ARTICLE V. The contracting officer shall at all times be afforded proper facilities for inspection of the work and materials and have access to the premises, the work and materials. The contractor shall furnish to the contracting officer such assistance as may be required by him in order to determine the character of workmanship applied and the quality of materials.

ARTICLE VI. The articles furnished and delivered hereunder, including packings and containers, shall be examined and inspected without unnecessary delay by a person or persons


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to be designated by the United States, and if found equal to the conditions herein set forth, shall be accepted and become the property of the United States. The said examination may at the option of the United States be made by means of samples selected at random from lots delivered. If any of the articles shall be found on said examination to be not equal to the quality herein stipulated for they shall be rejected and the contractor shall remove them from the premises within ten days after notice thereof.

All articles which are not examined and inspected within fifteen days after notice that the same are ready therefor, shall be accepted without examination or inspection.

ARTICLE VII. In the event that the contractor shall not receive shipping instructions in accordance with the foregoing schedule of quantities and deliveries, the contractor may store the articles awaiting such instructions, and add the cost of such storage as an extra charge to the price specified herein.

ARTICLE VIII. Payments under this contract shall be made to the contractor as soon as practicable after the delivery and acceptance of the articles aforesaid; but at least as frequently as once a month, and not later then ten days after statements shall have been rendered by the contractor covering the articles delivered and accepted during the preceding calendar month and the price thereof as hereinbefore provided, and any extra charges applicable thereto. And no payment under this contract shall delayed or deferred pending any investigation or verification of any guarantee or representation of the contractor herein any difference disclosed by such investigation or verification to be adjusted on subsequent, payments which may become due hereunder.

ARTICLE IX. The contractor agrees for itself and on its account, and this contract is upon the express condition that, no lien, or rights in rem of any kind, shall lie or attach upon or against thse articles to be furnished hereunder, or machinery, equipment or materials used in the manufacture thereof for or on account of any cause or thing, or any claim or demand of any kind except the claim of the United States of America

ARTICLES X. Unless this provision is waived by the contracting officer, the contractor agrees that every contract made by it for the furnishing to it of materials, supplies, machinery and equipment, or the use thereof, for the purposes of manufacturing the articles agreed to be furnished hereunder, may be assignable to the Government.

ARTICLE XI. In the event of any dispute with reference to wages, hours, or other conditions appertaining to said work, between the contractor or any subcontractor and labor employed by him in connection with furnishing the articles contracted to be furnished hereunder, the contractor or subcontractor shall immediately notify the contracting officer of the existence of such dispute and the reasons therefor.

ARTICLE XII. That in case of failure of the contractor to fulfill the stipulations of this contract according to their true intent and meaning, the contracting officer or such other officer as may be designated by proper authority may cause the services to be performed and the articles to be furnished by any other person or persons, in open market, without advertising therefor or otherwise, and the said contractor shall pay to the United States the additional cost or expense thus incurred.

ARTICLE XIII. The contractor further agrees to hold and save the United States, their officers and agents, harmless from and against all and every demand or demands, of any nature or kind, for or on account of the use of any patented inventions, article, or process included in the articles hereby agreed to be furnished and the work to be done under this agreement.

ARTICLE XIV. Neither this contract nor any interest therein shall be transferred to any other party or parties, and in case of such transfer the United States may refuse to carry out this contract either with the transferor or the transferee, but all rights of action for any breach of this contract by the contractor are reserved to the United States.

ARTICLE XV. No Member of or Delegate to Congress, nor Resident Commissioner, nor any other person belonging to or employed in the military service of the United States is, or shall be, admitted to any share or part of this contract, or to any benefit that may arise therefrom, but this article shall not apply to any contract within the operation or exception of section 116 of the act of Congress approved March 4, 1909 (35 Stats. 1109).


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ARTICLE XVI. No person or persons shall be employed in the performance of this contract who are undergoing sentence of imprisonment at hard labor imposed by the courts of any of the several States, Territories, or municipalities having criminal jurisdiction.

ARTICLE XVII. It is understood and agreed that wherever the words  contracting officer are used herein they shall be construed to mean the contracting officer executing this agreement, his successor in office, or any other person delegated by the Secretary of War to assume the duties incumbent upon such contracting officer, and any duly appointed representative of said contracting officer.

ARTICLE XVIII. No extra charge, e. g., for transportation beyond contractor s works or for storage, shall be included in the items of cost enumerated us Article I, subdivisions (1)-(3) hereof.

ARTICLE XIX. This contract shall be subject to the approval of the Surgeon General, U. S. Army.

In witness whereof, the parties aforesaid have hereunto placed their hands the date first hereinbefore written.

Witnesses:                                                                           Principals:
(Signed)             Wm.   PAUL YOUNG.                             (Signed) C.R. DARNALL,
                             CHAS. M. WALTON, Jr.                       Lt. Colonel, Med. Corps, Contracting Officer
                                                                                                       JOHNSON AND JOHNSON

COPIES REQUIRED

Prior to 1917, in writing up contracts six or seven impressions were made of each sheet of the contract form. Of these the first three were signed by the contractor and the contracting officer in the place prescribed on the form. The three thus signed were denominated numbers to distinguish them from the unsigned copies. Whenever the term number was used it referred to the signed instrument. When the term copy was used it referred only to the unsigned instrument. In August, 1917, an additional copy was called for in order that data concerning the articles and quantities being purchased might be furnished the War Industries Board of the Council of National Defense.18 In 1918, another copy was required for the inspection service. Additional copies were added from time to time to meet new requirements as they arose. By the end of 1918 the number of copies required had about reached the limit of the typewriter to produce in clear impressions.

DISPOSITION OF NUMBERS AND COPIES

Of the numbers of contracts, one went to the Auditor for the War Department, one to the contractor, and the third to the Surgeon General s Office. Two or three were for interdepot use. One, with the required affidavit of the contracting officer attached, went to the returns office, Department of the Interior, in conformity with law. One copy went to the War lndustries Board, Council of National Defense. One copy was furnished the customs service for use of the inspectors of medical and hospital supplies. Later a copy was required for the zone finance officer, the director of finance.

CONTRACT REVIEW

ADMINISTRATIVE

A contract entered into by a contracting medical officer required the approval of the Surgeon General before it became effective.19 If an emergency existed and time was a vital element in initiating work under the contract, authority occasionally was given by the Surgeon General to the contracting


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officer to waive Article XII of the contract, Form 41, which required this approval. In such cases the contract became effective immediately upon receiving the signature of both contracting parties. This authority often was granted and was not extended during the World War. After the three numbers of the contract, accompanied by a performance bond, when that was required, had been received in the Surgeon General s Office they were subjected to close scrutiny for any possible errors. If any were found which were material, the contract or bond or both were returned to the contracting officer for correction. If no material errors were found the contract formally was approved and the approving officer inscribed his signature to the appropriate indorsement on the second fold of the reverse side of the last sheet of the form of all three numbers. One of these numbers was thereupon returned to the contracting officer for transmittal to the contractor. The second number, accompanied by one copy of the bond, if one were furnished, was sent to the Auditor for the War Department, Treasury Department. The third number and the remaining copy of the bond were filed in the Surgeon General s Office. To this number was attached a schedule of deliveries and disbursements.

NUMBERING

Prior to June, 1917, the contracts were given the file number of the contractor with whom they were made and an appropriate subnumber. For example, if the file number were 14501, the contract would be numbered 14501-A, or another subnumber. This system was discontinued with June 15, 1917, and a serial system begun. The first contract approved on June 16 was given the number 1. Thereafter each succeeding contract approved was given a corresponding serial number. This series of numbers was continuous without reference to the fiscal year.20

BOARDS OF REVIEW

In January, 1918, there was created in the office of the Chief of Staff a purchase service 21 under a director of purchases, charged, among other things, with the supervision of all activities having to do with the placing of purchase orders for manufactured products and the drawing of contracts. This service became, in February, 1918, the purchase and supply division of the General Staff,22 and in April, 1918, the purchase branch of the purchase, storage, and traffic division of the General Staff.23 Under the director of purchases and supplies was created the office of surveyor general of supplies, charged with correlating the purchase, procurement, and production of munitions and other supplies for the use of the Army with the industrial resources of the country.22 The surveyor general became Second Assistant Secretary of War, charged with all questions of purchase and supply for all bureaus of the War Department24 and the office of surveyor general of supplies was abolished in April, 1918.23

Under these supervisory agencies many new methods based on civilian commercial practice, changes, and innovations began to appear in the purchase of supplies for the Military Establishment. Not the least among them were the requirements introduced relating to awards, forms of contracts, and safeguards in the matter of placing contracts. Early in July, 1918, the Second


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Assistant Secretary of War directed consideration of a plan for the establishment of boards of contract review in the several supply bureaus for the consideration of all contracts in excess of $5,000 before such contracts were finally executed.25 The instructions of the Second Assistant Secretary on this subject as fillally promulgated to the service are contained in the following supply bulletin:

Supply Bulletin No. 21.

WAR DEPARTMENT,
PURCHASE, STORAGE AND TRAFFIC DIVISION, GENERAL STAFF,
PURCHASE AND SUPPLY BRANCH,
Washington, August 16, 1918.

Subject: Boards of contract review in supply bureaus.

1. A board of contract review is hereby constituted in each supply bureau of the War Department. Each such board shall consist of preferably 5 and not over 7 members, including a representative of the finance section.
    2. The duties of each such board shall be as follows:
        (a) To approve or disapprove of thse final form of proposed purchase transactions, bearing in mind particularly the necessity of protecting the interests of the Government as to price, terms, and conditions in the following classes of cases.
            (1) All awards over $5,000.
            (2) All cost-plus transactions.
            (3) All awards where in cases of formal competitive bidding the award is recommended to anyone other than the low bidder.
            (4) Such other classes of cases as the board may consider desirable or as may, from time to time, be designated by higher authority.
        (b) To consider questions of purchase and contract policy within the bureau.
    3. Minutes shall be kept showing the time and place of each meeting, the members present, and as to all purchase transactions approved the following facts:
        (a) Number of transaction.
        (b) Name of contractor.
        (c) Address of contractor.
        (d) Subject matter.
        (e) Total amount, actual or estimated.
   
    Each cost-plus transaction and each award to other than the low bidder shall be indicated on the minutes by appropriate reference. If any purchase transaction is disapproved a statement thereof, together with its disposition, should appear on the minutes. If there is a dissenting vote with reference to any purchase transaction, the vote thereon should be recorded. A copy of the approved minutes should be transmitted daily to surveyor of contracts, purchase and supply branch, purchase, storage, and traffic division, General Staff.

By authority of the Secretary of War:
GEO. W. GOETHALS,
Major General, Assistant Chief of Staff,
Director of Purchase, Storage and Traffic.

   On June 1, 1918, in order to provide for a more careful and effective scrutiny of contracts before they were submitted to the approving officer for signature, there was established in the Surgeon General s Office a contracts and authorization section in the finance and supply division.26 The duties devolved upon this section were the keeping of adequate records of authorizations granted for the purchase of supplies and of the articles purchased under those authorizations; to scrutinize the contracts submitted for approval to discover whether they were authorized, whether they were technically correct as to form, nomenclature, specifications, packing instructions, points of delivery,


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etc., and expressed, so far as could be determined from them, the real covenants between the contracting parties; that the requirements of Army Regulations relative to authority of the signer had been observed; that proper performance bond had been furnished or other security provided whenever necessary; and that funds were available to cover the expenditures contemplated in the contract.
 
   Shortly after the middle of July, 1918, a board of review for Medical Department contracts was established in the finance and supply division of the Surgeon General s Office, in compliance with the suggestion of the Second Assistant Secretary of War above noted.27 This board absorbed the duties of the contracts and authorization section, and continued to function until the armistice was signed. In order that it might have sufficient information to enable it to act intelligently upon the contracts the following instructions were sent to the purchasing officers of the Medical Department on July 26, 1918.28

1. It is directed that in future all contracts, purchase orders, or interbureau procurement requisitions from your depot contain the following information:
        (a) File number under which authorization for purchase is given.
        (b) Reference to bids or quotations on the basis of which material was purchased.
        (c) Statement to the effect that purchase was made from lowest bidder or, if not placed with lowest bidder, the reasons why it was not so placed must be stated in memorandum attached to contract or purchase order.
    2. Abstract of circular bids must be forwarded promptly for checking against purchases made.
    3. No purchase shall be made on the basis of verbal quotation. If quotations is made by telephone or verbally, the bidder must confirm by letter its order that written quotation may be available if called for.

The following form, adopted August 2, 1918, properly filled in,29 was required to be attached to each contract or purchase order submitted to the board for approval.

To: The Surgeons General.

REASONS FOR AWARDING ATTACHED CONTRACT OR PURCHASE ORDER

*       *       *     *       *       *

The firm to whom the attached order is to be issued is as follows:
      1.  A manufacturer who will manufacture the material specified.
      2.  A dealer who has in stock the material specified.
      3. A dealer who partially owns or controls the output of the firm manufacturing the materials.

Contractor............................................................Contract date..............................................................

Circular proposal


Open Market


1. Award made to low bidder

Yes: no

1. Competition obtained and award made as  follows:


2. Award made to other than low bidder for the following reasons:


(a) Low bidder

Yes; no

 (a) to guaranty requirements


(b) Other than low bidder for the following reasons:


 (b) Low bid not in accordance with specifications


1. To guaranty requirements


 (c) Low bid quality unsatisfactory


2. Low bid quality unsatisfactory


 (d) Low bid delivery unsatisfactory


3. Previous dealings with low bidder unsatisfactory


 (e) Previous dealings with low bidder unsatisfactory


4. Low bid delivery unsatisfactory


 (f) Other reasons ( give detail)


5. Other reasons ( give detail)



Signed......................................................................
                                                    Contracting Officer


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The establishment of bureau boards of contracts review failed to complete the chain of superior agencies created to sit in judgment upon contracts for supplies for the Military Establishment. There was still needed, in the scheme of organization, another agency to supervise and direct the bureau boards of contract review.30 The establishment of this agency could not long be held in abeyance. It made its appearance under the title of superior board of review. The organization and duties of this board and the date of its establishment are given in the following supply bulletin:

Supply Bulletin No. 14.
WAR DEPARTMENT,
PURCHASE, STORAGE AND TRAFFIC DIVISION, GENERAL STAFF,
PURCHASE AND SUPPLY BRANCH
Washington, July 30, 1918.

Subject: Superior board of contract review.
1. A superior board of contract review is hereby constituted in the purchase and supply branch, division of purchase, storage, and traffic, General Staff. This board shall consist of the director of purchases and supplies, the surveyor of contracts, and either the chief procuring officer of each supply bureau or a member of the board of contract review of each bureau as may be designated by the bureau chief.
2. It shall be the duty of the superior board of contract review to consider the form and policy of contracts and contracting methods of the various bureaus, to pass upon particular contracts or other matters relating to purchase that may be referred to it by the various bureaus or higher authority, and to recommend its conclusions to the director of purchase, storage, and traffic.
3. Questions arising within a bureau and requiring the attention of the superior board of review, as specified in the preceding paragraph, shall be submitted, after consideration by the bureau board of contract review, to the superior board hereby constituted.

By authority of the Secretary of War.
GEO. W. GOETHALS,
Major General, Assistant Chief of Staff,
Director of Purchase, Storage, and Traffic.

REFERENCES

(1) Act of July 16, 1798 (1 Stats. 610). Section 3714, Revised Statutes.
(2) Military Laws, Rules, and Regulations for the Army of the United States, Adjutant and Inspector General s Office, January, 1820, p. 102.
(3) Ibid., p. 105.
(4) Supply Circulars Nos. 99, 102, 103, 110, 120, Purchase, Storage, and Traffic Division, General Staff; October 11-Nov. 29, 1918.
(5) Section 3732, Revised Statutes as amended by act of June 12, 1906 (34 Stats. 255).
(6) Act of March 2, 1901 (31 Stats. 905).
(7) Act of July 5, 1884 (23 Stats. 109).
(8) Act of June 12, 1906 (34 Stats. 258).
(9) The Military Laws of the United States, 1915, fifth edition, Government Printing Office, 1917, 438.
(10) Act of August 29, 1916 (39 Stats. 639).
(11) Supply Circular No. 88, Purchase, Storage, and Traffic Division, General Staff, September 7, 1918.
(12) Form 42, Medical Department.
(13) Form 43, Medical Department.
(14) Form 44, Medical Department.
(15) Form 45, Medical Department.
(16) Supply Bull. No. 11, Purchase and Supply Branch, Purchase, Storage, and Traffic Division, General Staff, August 1, 1918.


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(17) Copy of contract between Lieut. Col. C. R. Darnall, M. C., and Johnson and Johnson, June 23, 1917. On file, Medical Supply Depot, New York, Field Medical Supply Depot files.
(18) Letter from the Surgeon General to the officer in charge, Medical Supply Depot, St. Louis, Mo., August 25, 1917. Subject: Extra copy of contracts. On file, Finance and Supply Division, 713-539/64.

(19) Form 41, Medical Department, Article XII.
(20) Letter from the Surgeon General to the Director of Purchases and Supplies, Mills Building, Washington, D. C., July 5, 1918. Subject: System of numbering contracts. On file, Finance and Supply Division, S. G. O., 750-198 D. P./87.

(21) General Orders, No. 5, War Department, January 11, 1918.
(22) General Orders, No. 14, War Department, February 9, 1918.
(23) General Orders, No. 36, War Department, April 16, 1918.
(24) General Orders, Nos. 25 and 44, War Department, March 11, and May 7, 1918.
(25) Letter from the Second Assistant Secretary of War to Brig. Gen. Hugh S. Johnson, Director of Purchases and Supplies, July 10, 1918, relative to boards of review. On file, Finance and Supply Division, S. G. O., 750-198 D. P./132.

(26) Division order of Col. C. R. Darnall, M. C., to Chief of Finance and Supply Division, May 29, 1918. Contract and Authorization Section. On file, Finance and Supply Division, S. G. O., 750-714 S. G./321-A.

(27) First indorsement from the Surgeon General to the Chief of Staff, July 19, 1918, relative to boards of contract review. On file, Finance and Supply Division, S. G. O., 750-198 D. P./132.
(28) Letter from the Surgeon General to the officer in charge, Field Medical Supply Depot, Washington, July 26, 1918. Subject: Contracts, etc. On file, Finance and Supply Division, S. G. O., 713-Misc./64.
(29) Letter from the Surgeon General to the officer in charge, Field Medical Supply Depot, Washington, August 2, 1918. Subject: Contracts, etc. On file, Finance and Supply Division, S. G. O., 713-Misc./64.
(30) Letter from the Director of Purchase, Storage, and Traffic to Maj. Gen. W. C. Gorgas, Surgeon General of the Army, July 24, 1918. Subject: General Board of Contract Review. On file, Finance and Supply Division, S. G. O., 750-198 D. P./132.