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192 for depreciation of .values of THE MARINE REVIEW e Contract for Construction of Proposed Wooden Steamers CONTRACT FOR CONSTRUCTION Fee Basis Bonus Clause CONTRACT made this between the “party of the first part (herein called the Contractor) and the United States Shipping Board Emergency Fleet Corporation, a corporation of the District of Columbia, party oe the second part (herein called the owner). For valuable considerations and mutual promises of the parties, it is agreed as follows: in consideration of ‘the I Work To Be Done The Contractor hereby agrees to construct in accordance with the drawings and specifications hereto attached and hereby made a part of this contract, under the Rules and Regulations of the American Bureau of Shipping, prescribed for the high- est classification, filers Sane tanageatati'e, cub sey wooden hulls suitable for cargo eae The Contractor agrees to deliver said hulls to the Owner afloat at the works of the Contractor bees ice ..on or about the following dates: The Owner may from time to time by instruction in writ- ing, make such changes and alterations in the drawings and specifications not materially affecting the general design of the vessels as it may deem necessary. If such change shall delay completion of the work then the Contractor is to be allowed additional time sufficient to cover such delay. II Payment The Owner in consideration of the performance of this agreement by the Contractor agrees to reimburse the con- tractor for the actual cost of the work and to pay the Con- tractor for its services a fee of twenty thousand dollars ($20,000) per hull. For the purposes of this contract, the actual cost shall be generally as defined in the United States Revenue Bill of September 8th, 1916, Section 302, insofar as the requirements of said Revenue Bill are applicable to and not inconsistent herewith. : The actual cost shall include the following and items similar thereto in principle, provided that all items of overhead or indirect cost included in paragraphs (b) to (e) of this article and all items under paragraphs (f) and (g) shall as far .as possible be submitted to the Owner in advance for its ap- proval, and no item so submitted in advance and disapproved by the Owner shall be payable to the Contractor: (a) The cost of labor and materials, machinery, equipment and supplies entering into the building, or construction of the vessel and other direct charges. % (b) A proper proportion of running expenses, including ordinary rentals, cost of repairs and maintenance, light, heat, power, insurance (including liability and compensation insur- ance) management, salaries, and other indirect charges. (c) A proper proportion of interest accrued and paid on debts or loans, contracted to meet the needs of the business and the proceeds of which have been actually used to meet such needs. . (d) <A proper proportion of taxes of all kinds accrued and paid with respect to the business or property. (e) A proper proportion of losses actually sustained in connection with the business, including losses from fire, flood, storm, riot, vandalism, any act of God, acts of war, or other casualties, and not compensated for. by insurance or otherwise. (f) A reasonable allowance, according to the: conditions, plant and property (account being taken of exceptional depreciation of extensions, in- creases, and additions to plant and property specially acquired OF HULLS STANDARD TYPE tion obtained from be treated as confidential. for or devoted to the manufacture or erection of the work or the construction of the vessel under this contract provided the same have not been paid for by the Owner under (g).. (g) The cost of labor, materials, machinery, equipment and supplies (other than real estate) for the establishment of and extensions, increases.and additions to plant and property of the Contractor authorized by the Owner specially acquired for or devoted to the building or construction of the vessels under this contract and rentals actually paid for such establishments, extensions, increases and additions authorized by the Owner. The fee for services shall be paid on each hull on delivery of the hull to the Owner afloat. Physical property represented by items ap cost included in paragraph (g) supra paid for by the Owner shall continue to be Owner’s property after termination of this contract, but may be purchased by the Contractor at such termination at a valuation to be agreed upon. Determination of Cost The determination of the actual cost as above defined shall be made by and under the direction of George W. Goethals, as general manager of the Owner, or his successors in such office (herein called the General Manager) and his decision shall (except as hereinafter stated) be binding on both parties. Wherever possible, he will lay down in advance the methods to be followed in ascertaining and determining the actual cost, and where this cannot be done, will act on claims sub- mitted by the Contractor. He will determine methods to be followed by the Contractor in preparing bills and by engineers and auditors in certifying to them, and will determine the items which must be referred for his decision. He will so far as possible determine in advance the ratio of amortiza- tion referred to in paragraph (f) supra, and allowances to be made for indirect charges. Naval Architect The Owner will employ one or more inspectors of recog- nized ability in their profession to supervise and assist in the construction of these vessels or hulls. They and their assistants, described herein as the Owner’s inspectors, will represent’ the Owner. and will be required to watch closely the construction. Such one of them as shall from time to time be so designated by the Owner will act as the representa- tive of the Owner and to him shall be referred all questions arising under the contract at the works. His decision on all questions when rendered under: his general authority or after approval by the Owner shall be binding subject in all cases to appeal to the General Manager of the Owner. Auditors The Owner may send an auditor to the works Contractor to supervise and assist in the accounting. The accounts and records of the Contractor shall at all reasonable times be open to inspection by the Owner. All statements and accounts relating to expenditures and cost hereunder shall be made by the Contractor in such form as may be required by the General Manager. No change shall -be required in the present methods and principles of keeping costs by the Contractor provided the General Manager deems them adequate for the determination of actual costs.. All informa- Contractor’s accounts and records shall of the Time of Payments Payments shall be made to the Contractor by the Owner monthly within 15 days after the submission of bills to cover the approved actual cost for the previous months as. defined under paragraphs (a) to (e), inclusive, and tozether with the additional approved actual costs as defined under paragraphs (f) and (g). No payment shall be made except when bills are certified by one of the Owner’s inspectors or an auditor. Final ap- proval of all bills by such inspectors or auditors shall be necessary for payment. Title to Property The vessels as they are constructed together with all ma- terials, machinery, equipment and supplies brought upon the (Concluded on page 193)