Now there was to the federal contracting rule one other exception which was, for our purposes here, the most important of all. The law authorized the Secretary of War to enter into contracts without the formality of advertising and soliciting bids, _in the event of a national emergency_. We had not yet been a week at war with Germany when the Secretary of War issued proclamation declaring such an emergency to exist. His signature to this document swept away the most serious legal restrictions which circumscribed the War Department’s contracting powers. The hand of the Department had been further strengthened by the National Defense Act (passed in 1916), which empowered the Secretary of War, “in time of war, or when war is imminent,” to command a manufacturer to produce supplies for the United States at prices fixed by the War Department itself; and if the producer refused this arrangement, then the Act empowered the Secretary to commandeer and take over the producer’s business, paying the producer, however, a fair and just compensation. Competition for the Government’s contracts under the normal procedure would have been fatal to both speed and secrecy in the procurement of war supplies, and therefore the law wisely permitted the War Department to abandon competition in the emergency of war. But, with the safeguard of the competitive bid abandoned, it is reasonable to suppose that the officers of the War Department, if they were faithful servants of the public, would seek to protect the Government against the extortioner by the substitution of other devices not open to the objection either of delaying the war manufacturing program or of betraying its nature and extent. And so they did. And although the methods of applying the protection were numerous, the essence of it was that the contractor was required by the terms of his contract to produce war supplies at cost, plus a profit for himself, the profit being reckoned in various ways. A contract of this sort was known as a cost-plus contract. Contracts of the normal, older sort, in which the Government dealt with the lowest bidder or with a producer with whom the law empowered the federal purchasers to deal directly without competition, were known as fixed-price or lump-sum contracts. The cost-plus contract was not entirely unknown to American business before the war, but it had been employed only sparingly. The war brought the form into great prominence, since much of the most important war business was conducted on the cost-plus plan. It is noteworthy that the form has persisted to some extent in American private business, and particularly in the building industry, since the armistice.