Demobilization : $b our industrial and military demobilization after the armistice, 1918-1920Crowell, Benedict
History
Demobilization : $b our industrial and military demobilization after the armistice, 1918-1920
Crowell, Benedict
United States. Army. American Expeditionary Forces -- Demobilization; World War, 1914-1918 -- United States
The next provision dealt with indemnifications for the invasion of
patent rights. The fifteenth provided for the settlement of disputes
and claims arising out of questions of performance or nonperformance
under contracts. Later the Board of Contract Adjustment was organized
to fulfill this function. The next three provisions dealt with hours
of labor, the settlement of wage disputes, and the conditions of labor
at war plants. Then came a provision requiring the producer to make
periodic reports of the progress of his work, one defining what costs
would be allowed in a cost-plus contract, one allowing the contractor
to appeal to the Board of Contract Adjustment in the event that a
contracting officer of the Department disallowed costs in excess of
$5,000, one providing for uniformity in contractors’ cost accounting,
one forbidding the payment of wages above current local rates, and a
final provision vesting in the United States the title to all materials
in course of manufacture under a cost-plus contract.
Such were the standard contract provisions, protective and fair to the
Government and the producers alike. They were not adopted until the end
of the summer of 1918, and therefore no important amount of government
business was placed on their identical terms. As stated, however,
most of their requirements in substance had been written into the war
department contracts previously drawn.
The cost-plus contract under which the immense building
construction program of the War Department was carried through
was of a peculiar form, not used elsewhere. It was known as the
cost-plus-with-sliding-scale-and-fixed-maximum-fee contract. The
distinguishing feature of it was that each contractor was paid a
percentage of the cost as profit up to the extent of a fixed maximum
profit, and he could not be paid more than this profit whatever the
cost of the job. The profit percentage diminished on a sliding scale
as the cost mounted. In its latest form this contract paid a profit of
7 per cent to contractors on jobs costing less than $100,000, and the
profit declined gradually in percentage until it reached the low mark
of 2½ per cent paid as profit for work costing more than $9,650,000. No
building contractor, however, could be paid more than $250,000 profit
on a job, whatever its cost; and out of his “profit” he still had to
pay his overhead operating expenses.
In its building program the War Department became one of the largest
employers of labor in the country, and its building contract was
roundly attacked as a chief element in the swift rise in wages. To meet
this attack the Department convened a board of construction engineers
and other experts to study the contract. Instead of condemning the
form of contract, the report of this board endorsed it in unqualified
terms and declared that, if anything, the contract tended to check
extravagances in the work.
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