In view of the fact that the State Highway Department did not complete its organization until late in the season of 1917 and due to the further fact that practically all contracts were awarded after the first day of July, 1917, it was impossible to place before the State Highway Commission a report which would be of any particular value to the general public at the end of the last fiscal year. Therefore, it has been decided to submit the two fiscal years under one cover in order that the public may have at its command a statement of public highway expenditures and the accomplishments of the State Highway Department under the supervision of the State Highway Commission. It was considered advisable by the Highway Commission to award contracts and get work under way as early in 1917 as the necessarily late organization of the Department would permit. The matter of preparing estimates and calling for bids was therefore carried out as rapidly as possible, using the data and surveys of the previous administration as a basis for estimates. It is believed that by awarding the contracts during the year 1917, approximately twenty per cent was saved on all construction for the reason that the shortage in labor and material did not become serious in the State of Oregon until late in that season. I wish to call the attention of the Commission to the law which requires the State Highway Commission to make county surveys upon the State highway system within the boundaries of any county making application. I believe the law to be a good one, inasmuch as it furnishes free to counties engineering skill which they cannot afford and places at their command an organization which is in a position to carry out preliminary location and estimates. The law states that this work shall be charged to the counties under any future appropriation which may be made to them.