stantly revised and added to, and our buyers are in daily touch with individuals and companies on such lists. Form of contract There is enclosed, herewith, form of contract which is used in connection with the purchase of strategic and critical materials. In addition to the terms and conditions shown thereon, special terms and conditions are developed for each contract. However, where repeated purchases have been made, such as rubber, fiber, shellac, mica, quartz crystals, and industrial diamonds, the special terms and conditions for each of these items have been standardized as much as possible, and accepted by the trade. Escalator clause There is quoted below for your information the usual type of escalator clause which is now used in strategic- and critical-materials contracts: The prices which shall be paid shall be the average price for the month immediately preceding the month in which the tonnage is tendered for shipment, as quoted by the Engineering and Mining Journal Metal and Mineral Markets. Minimum and maximum contractual periods Every effort has been made to negotiate contracts calling for deliveries as required in the Munitions Board procurement directives, and under such program deliveries in some cases are made within 60 days from the date of contract where the quantity cailed for under the contract is available and can be shipped. We lo have a few contracts that call for deliveries over a period of 5 years from the late of the contract. With the larger amount of contract authorization authorzed by the Congress, it is now possible to make contracts calling for extended leliveries. The majority of the contracts at the present time call for delivery by June 30, 1949. Premiums The policy of the Munitions Board has been that the Bureau shall not enter into contracts for materials at prices above the current published market prices, and we have adhered strictly to this policy. Of course, where the Buy-American Act becomes operative we are guided by the provisions and interpretations placed upon that act. I trust the above will be of assistance to the committee. CLIFTON E. MACK, Director, Bureau of Federal Supply. [SUBCOMMITTEE NOTE.-The Bureau of Federal Supply reports that the escalator clause quoted in this letter has been applied to a few metal contracts only. Contracts for ores, such as manganese, have not contained the escalator price clause.] EXHIBIT 38 BUY-AMERICAN ACT NOT FOR PURPOSE OF PROVIDING PREMIUM PAYMENTS TO DOMESTIC PRODUCERS ACCORDING TO THE BUREAU OF FEDERAL SUPPLY Mr. GEORGE H. SOULE, Jr., Care of Public Lands Committee, TREASURY DEPARTMENT, House Office Building, Washington, D. C. DEAR MR. SOULE: The following paragraph has been used in letters to individuals who have suggested the use of the Buy-American Act in connection with the purchase of domestic materials for the stock pile where the individuals were, in effect, in need of a subsidy to meet increased costs of production in their particular field of endeavor: "The Buy-American Act (47 Stat. 1520), in essence, requires Government agencies to purchase domestic materials when available when such materials are offered in competition with foreign materials unless, among other reasons, the head of the department or independent establishment concerned shall determine the cost of the domestic material to be unreasonable. For the purpose of attaining uniform determinations as to cost in connection with the application of the above exception under the act, the Director of the Bureau of Federal Supply has determined that a differential of 25 percent be applied in favor of domestic products to be delivered in the continental United States where the cost of the foreign product exceeds $100, and a differential of 100 percent where the cost of the foreign product is $100 or less. These differentials, however, are in no way for the purpose of providing premium payments to domestic producers or suppliers." If the above is not clear to you please advise, and we will do what we can to give you further explanation. Very truly yours, CLIFTON E. MACK, Director, Bureau of Federal Supply. [SUBCOMMITTEE NOTE.-It is reported that as of October 1, 1948, differential payments above cost of foreign materials, as provided by the "Buy AmericanTM provision of the Stock Piling Act of 1946, have been granted in only 6 or 7 contracts to domestic producers (primarily manganese and chromite producers since July 23, 1946. Very little material has been delivered under these contracts. Inadequate differentials appear to be the cause.] Circular Letter B-61. EXHIBIT 39 To: Heads of departments and establishments. TREASURY DEPARTMENT, BUREAU OF FEDERAL SUPPLY, From: Clifton E. Mack, Director, Bureau of Federal Supply. Title III, section 2, of the act of March 3, 1933 (47 Stat. 1520; 41 U. S. C. 10a), the so-called Buy-American Act, provides in part that: "Notwithstanding any other provision of law, and unless the head of the department or independent establishment concerned shall determine it to be inconsistent with the public interest, or the cost to be unreasonable, only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States, and only such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles! materials, or supplies mined, produced, or manufactured, as the case may be, it the United States, shall be acquired for public use **** In applying the exception which permits purchase of products of foreign origin if the cost of domestic products is unreasonable, the following differentials shall be applied by executive departments and independent establishments in favor of domestic products to be delivered in the continental Untied States: (a) Where the cost of the foreign product exceeds $100, a differential of 25 percent. (b) Where the cost of the foreign product is $100 or less, a differential of 100 percent. When the cost is enhanced by duty paid the United States, the differential shall be 25 percent or 100 percent, as the case may be, of the cost exclusive of duty. The cost of the domestic product is unreasonable whenever it exceeds the cost of the foreign product including duty plus the amount of the differential. This order does not prejudice the authority of any department or independent establishment to reject a bid for a domestic product as unreasonable, or negotiate for a lower price, for any reason other than the comparative cost of a foreign product. In appropriate cases the heads of departments or independent establishments concerned may determine that the public interest is inconsistent with purchase of a domestic product, for any reason other than the comparative cost of a foreign product. The term "domestic product" means a product entitled to preference under the Buy-American Act. CLIFTON E. MACK, Director, Bureau of Federal Supply. [SUBCOMMITTEE NOTE.-Circular Letter B-61 supersedes Circular Letter No. 37 and is essentially the same.] Person or 4. Shipping point 4a. If of foreign origin or production, name U. S. port of entry persoas authorized to sign offers and supervise all matters concerning offers and contracts: EXHIBIT 41 CONTRACT MUNDER UNITED STATES TREASURY DEPARTMENT OFFER AND ACCEPTANCE Bureau of Federal Supply, Strategic and Critical Materials Division, 7th and D Streets, S. The materials, supplies and/or services to be obtained by this instrument are authorized by, are for the purposes set forth in, and are procured pursuant to the Strategic and Critical Materials Stock Piling Act, Public Law 520, 79th Congress, approved July 23, 1946. Payment will be made by the Bureau of Federal Supply upon the receipt of properly certified invoices, as more particularly provided for in the attached Special Terms, Conditions and Specifications. CONTRACTOR'S OFFER DATE Confirming negotiations, the undersigned offers to furnish any or all of the following on the terms specified on both sides of this page and on the continuation sheets numbered 2 to. inclusive, attached hereto and made a part hereof, including delivery. The Government's acceptance must be received within days from the date shown above. METHODS of PACKING, MARKING, WEIGHING, INSPECTING and SHIPPING shall be as provided herein, except as otherwise directed by the Government. Shipping instructions will be furnished by the Government as herein provided. GENERAL CONDITIONS FOR STRATEGIC AND CRITICAL MATERIALS AND SERVICES CONTRACTS 1. Offer and acceptance.-Offers are made on the basis that acceptance, within the time specified, of the offer to furnish any or all of the materials, supplies, or services described therein shall constitute a contract between the offeror and the United States Government, which will bind the offeror to furnish and deliver the materials, supplies, and services for which his offer is accepted. 2. Method of award.-Unless otherwise specified by the Government or by the offeror, the right is reserved to the Government to make one award on each subitem or item, or on a group of subitems or items, as may be in the best interest of the Government. The right is also reserved to the Government to reject any or all offers, to waive technical defects therein and to accept or reject any part of any offer. 3. Discount.-(a) If the contract is one for materials or supplies, time, in onnection with discount offered, will be computed from date of the delivery f the materials or supplies to carrier when final inspection and acceptance are t point of origin or foreign port of embarkation, or from date of delivery at estination when final inspection and acceptance are at this point, or from date orrect bill or voucher, properly certified by the contractor, is received if the atter date is later than the date of delivery. (b) If the contract is one for service, me, in connection with discount offered, will be computed from date of receipt f correct bill or voucher, properly certified by the contractor, covering the ervice rendered, and after performance of such service and acceptance thereof y the Government. 4. Time of delivery.-The materials, supplies, or services described in the conact shall be delivered within the time provided for in the schedule of deliveries. 5. Minimum order; weight.-Unless otherwise indicated, as for example, by inimum percentage chemical content, packing requirements, lot sizes, or stateent of a minimum order limitation, the unit shown for each item determines e smallest quantity which a contractor will be required to deliver. Where e unit shown is a measure of weight, such weight is understood to be net less otherwise stated. 6. Oral modifications.-No oral statement of any person shall be allowed in y manner to modify or otherwise affect the terms of the offer, specifications, * contract. 7. Inspection and test.-(a) All material and workmanship shall be subject to spection and test at all times and places and, when practicable, during manuicture. In case any materials, supplies, or services are found to be defective quality, composition, or workmanship, or otherwise not in conformity with e specifications, the Government shall have the right to reject such materials, upplies, or services, or to require their correction or replacement, or to accept em at a proper reduction in price. Rejected materials, supplies, or services all be removed by and at the expense of the contractor promptly upon request. he contractor shall be liable to the Government for any cost of removal, correcon, or replacement resulting from failure to do so as required. (b) If preliminary or final inspection or test is made on the premises of the ntractor or subcontractor the contractor shall furnish or arrange to furnish, ithout additional charge, all reasonable facilities and assistance. Inspections ad tests shall be performed by the Government in such manner as not to unduly elay the work. Special and performance tests shall be made as described in e specifications. The Government reserves the right to charge the contractor or any additional cost of inspection or test when materials, supplies, or services re not ready at the time inspection or test is requested by the contractor. (c) Final inspection and acceptance of the materials, supplies, and services will e made after delivery, unless otherwise stated. If final inspection is made at point other than the premises of the contractor or subcontractor it shall be at he expense of the Government except for the value of tested samples used and ejected. Final inspection shall be conclusive except as to latent defects, fraud, nd gross mistake. Final inspection and acceptance or rejection of materials, upplies, or services shall be made as promptly as practicable but failure so to uspect and accept or reject materials, supplies, or services shall not impose lability on the Government for materials, supplies, or services which do not onform to the specifications. 8. Responsibility for materials and supplies.-The contractor shall be responsible for materials and supplies covered by the contract until delivered at the designated point, regardless of the point of inspection, and the contractor shall ear all risks as to rejected materials and supplies after notice of rejection. 9. Variance in quantity.—Unless otherwise specified any variation in the quantities delivered under the contract, not exceeding 10%, will be accepted, when caused by conditions of loading, shipping, packaging, or allowance in manufacturing processes. 10. Assignment of payments.-If this contract provides for the payment in the aggregate of $1,000.00 or more, then all moneys due or to become due thereunder may be assigned by the contractor to a bank, trust company, or other financing institution, including any Federal lending agency, in accordance with the provisions of the Assignment of Claims Act of 1940 (54 Stat. 1029, 31 U. S. C. 203, 41 U. S. C. 15). 11. Federal taxes.-(a) The prices offered herein shall be deemed to include any Federal taxes imposed by the Congress which on the date of this offer are applicable to the materials, supplies, or services, or components thereof, offered. |