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BO RD OF GOVERNORS

OF THE

FEDER L RESERVE

SYSTEM

WASHINC3TCN

R-943

DDRESS DF F ICIAL C D ESPD N D EN C E

TD T H E SD D

January l 1942

Dear

Sir :

There is ~ m c J o s e d

for

your information a copy

of E::ec'J.t.ive Ordar No. 9001 issued

by the

President of

the 'C nited States on December

27, 1941, authorizing the

• rvar and Navy Departments and

the United

States Maritime

Corr lliesio::l to perform the functions and exercise the

powers described in Tit le

I I

of

the

Act of December

18,

1941,

pertaining

to Goverrunent contrac-t,s. This

Execu

t ive Order i s printed a t

page 6787

of the

Federal Regis

t e r for Tu.csdey, December 30, 19LJ., and is called to

your

at tent ion

because

of

the

information

i t

contains

with respect

to

the manner in which defense

contracts

:nay be handled. The Executive OrdGr was not received

soon

enough to

be

inch::.ded the January 1942

Bulletin

but we

oxpect

to print

i t

in tho February issue for

the

info:::·mation of

mGmbor

banks •

J < ~ n c l o s u r o

TO TI-lE PRESIDENTS OF ALL FEDERAL RESERVE BANKS

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R-94:3-a

E . X E C U T I V ' 1 ~ ORDER

NO.

0001

AUTHORIZING

TH VI R DEPli.RT J'lENT, THE NAVY D E P l i l l . T r f t l l i ~ T Al.'l D TH.E UNITED

STATES J\iARITII'ilE CONifv1lSSION

TO

PBH.FOH. vi THE

FUNCTIONS

AND E."'XERCISE

THE

POW'i'..RS

DESC.ct.IBED

IN TITLE

I I

OF

P N

ACT APPROVED DECEi.IDER 18,

l91tl•

ENTITLED "AN ACT

TO EXPEDITE

THE

PROSECUTION

OF

'l'HE WAR EYfORT",

AHD PRESCRIBING .REGULATIONS FOR 'l'HE EXERCISE OF SUCH F U N C T I O ' ~ S

AND POW RS

The

successful

prosec1.1tion

of

the war requirGS

an al l-out

in

dustr ia l

mot·ilization

of

the United

States

in

order thd. the ma-Leria.lp

necessary to

win the war

may

be

produced in

the s h o r t ~ 1 s t possible

tirne.

To accomplish th is objective t is necessary that ·::.he DelJartme;lts

of

~ i a r

:.md

t h ~ ~

Navy

a.11d

the

United States

Mari tih1e Cmmnission

cooperate

,;.o the

fullest po::;sible degree with the Office of Production

Management

in

the

endeavor t. J

make avnilable

for

the pr:Jduction

of

war

m&.terial a l l

the

indu;:;trial

resou;.·ceiJ of tL.e Country. I t is· expected

that

in the exer

cise of

the

powers

hereinafter granted, ·these Af;encies a '.ci

+,he

C;ffice

of

.

Production

Management will work t o g e t h ~ r to

bring

c.bout the c o n v e ~ s i o n

of

:mmuractu::-ing

i :tdustries to

war

production,

incl4ding

th0 surveyi.'lg

cf the war

p o t ~ n t i l of

industriss, plant

tlf plant;

tho

spreading of

war

orders;

the conversion of faci l i t ies the

a;:;sura.'1ce

of cfficicmj;

and

speee.;y production; the development and use of 3ubcontra.::ting to the ±Ull

est

extent

and the conservation

of

strategic materials •

TITLE I

l

fr.f virtue

of the

authority in me

vested l rJ the Act

of

Con

gress, enti t led "An Act to expedite

the

prosecution of

the

War effor t",

approved December

18,

1941,

(he:::-einafter called

"the Act")

and

as Presi

dent of

the

United

States

and Commander-In-Chief of the

ArrrrJ

and N a ~ r of

the United States,

and deeming

tha.t such

act ion wil l

faci l i ta te the pros

ecution

of the war, I do

h e r e t ~ ; -

order that the Tiar Department, the Navy

Department, and

the

United States

Maritime Commission

be and they hereby

respectively

are

aut{lorized

within the l imits

of

the amounts appropriated

therefor

to

enter into contracts

and

into

o.,aendments

or

modifications

of

contracts

heretofore or hereafter m a d e ' ~ ami to maka advance, progress,

and

other

payments

thereon, without regard

to

the provisions

of

h ~ w

re -

la t ing

to the making, performance, amcmdment, or modification of contracts.

The authorit".f

herein

conferred

mey

be exercised by -the

S e c r e t ~ . r y

of Wru"',

the Secretary of

the Nav.f,

or

the

United States N l ~ r i time

Conmdssion

re -

spectively o:r· in

their

discretion

m1d

br tneir

direction respectively may

also

be

exercised t:b.rough a.n;y other officer or officers or civi l ian of

f ic ia ls of

the

War or

the NaV'J

Departments

or the Uni .ed States M::..ri time

Commission. Tha

Secretary

of War, ti· e Sec:r:etary of

the

navy, or the

United

States

Maritime Co:mr;1ission

ney confer

upon any officer or officers

of their

respective departments,

or civi l ian officials

thereo.f,

tb; power

2

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-2-

to make

fur ther

d.elep,ations of such

powors

within the War and ti1e Havy

DcpartrnGnts, and the United

States

l • . ~ a r i t i r n e Commission.

2.

The

contracts

hereby

authorized

to

be

made

include agr08-

ments

of a l l

kinds

(whether in

tl1e

form of

lett<::rs

of

in tent

purchase

orders, or otherwise) for

a l l

types and kinds

of

thingr; and s r ~ r v i c e s

nC;cessary, appropriate or

convenient for the prosecution of war, o:c for

th invention,

dovelopmont,

or production of ,

or

research c o n c f ~ r n i n g

a· w

such

things,

including but not

limit0d to , ai rcraf t ·buildings, vass;;;1s,

arms, armament, equipment, or supplies of any

kind,

ol'

any

portion

there

a±',

including

plans, spar3 parts

and equipment

therofor, natsr ia l s D1J p-

plias fac i l i t i es

u t i l i t i e s machinery,

machine

tools ,

and

c.ny

other

equipment, without

any res t r ic t ion

of

an_y kind,

e i ther

as to

type, char

acter ,

location

or form.

J.

The War Department, the Navy

Depa 'tmant)

and

the

United

States Maritime

Commission

ma;r by

agreement modify

or a m e ~ d

or Gettle

clai;'Js 1mder cont rac ts heretofo1·e or hereafter made, may make

advar.ce,

pr·ogress, and other payments

upor;

such contracts of a: ;y·

p.srcentum

of the

contract

price, and may

enter

into agreements

with contractors

an:i/or ob

l igors modifying or

releasing

accrued

obligations

of any sur t includi.ng

accrued l iquidated dam3.ges or

l i ab i l i ty under

st<rety or oth·c:r bonds, when

  - ~ v o r , in the judgment of the Vfa:r D,Jpartmunt, tho

Navy

Departr:-tont, or the

United States

f•ilaritime Commission

respectively tl:F:;

prosecution

of

the vm.r

i s thereby fac i l i ta ted .

A:nandrnents

and )nodifications of

contracts

way be

with

r

without considern.ti::m m1d Jae:y be

ut i l ized

to c..ccomplish the same

things as

any

original

contract

cou.ld

have

acc01.1plished

hereunder,

i r re -

spective of

the

tiwe or circumstances of

t h r ~

makin,:'; of or

the form

of the

contract

amended

or modified,

or

of the

maenciing or

modifying contract ,

and

i r respect ive of

r ights which Da y havo

accrued under the contract

1

or

the

amendments

or modifications

thereof .

4 ·

Advertising,

competitive bidding,

and

bid, payment, per

forii1ance or

other bonds or other forms of secur i ty, need not be required

•

TITLE I I

Pursuant

to

Tit le

II

of the

Act

and

for

the

p:i. otcction

of

the

interes ts of the United States,

I do

hernb'J prescribe th-s; following regu

lat ions for

the exercise of tha authority

herein

conforrod

upon

the

\liar

Departuent, the

Navy

Depa:rtnwnt, and the United

States

:Vlaritimo

C o r Y ~ : n i s

sion.

l

All

contracts

and

a l l purchases

made pursuant to

the

Act and

this Executive Order

sl1all

be reported to

the

President of the United

States .

Such

reports shal l be

uade a t

leas t

quarter--annually, provided,

iloweve:c,

tha t purchases

or

contracts

of less

t

. 1 ~ n ; ~ J . O O , 000 wa;r be c o m ~ o l -

idated in

such

repor ts

with

o t ~ B : r

Guch

purchases a11d need not be separately

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R-943-a

set forth.

In

case tl·1e War Department, tho NaV J Department, or the

United States Maritime Commission shal.l deem

any

purchase or contract

to

be

restricted,

confidential,

or

secret

in

i ts

nature

qy

reason

of

i t s

subject matter, or

for

other re.asons affecting the public inter ::st,

such purchases

or

contracts shall

not

be included with

those described

in

the

report just mentioned,

but shall

be included in a Sf:parate re

port

containing

such restricted, confidential, or secr·;;:t purchaSE JS or

contracts.

The

Secretary of War, the Secretary of the

Hav<.r,

and

the

United States Maritime Commission shall make public so

reuch

of such

reports other

than

tho3e reports cover:tng 1·estricted, confidential,

or secret

contracts

or purchases) as they

shall

r e s ~ J e c t i v e l y deem to

be compatible

with

the public

interest.

2.

Notwithstanding anything in the Act or

this

Executive

Order

the

War

Department,

the

NaV J

Department, and

the

United

States

Maritime Commission

shall

not discriminate in any act performed

there

under

against

any p;:;:rson on

the

ground of

r a c e ~

creod, color or na

tional

origin, and

l l

contracts shall

be

deemed to incorporate b r

reference a provision that the contractor

and

any

subcontractors

there

under

shall not

so

d i s c r i m ~ t a t e

3. Ho

claim

against

the

United States

arising

under any pur

chase

or

contract

made

under the a u t h o r ~ t y of

the

Act shall be assigned

except

in accordance

with the

Assignment of Claims Act, 1940

Public

No.

811,

76th Congress, approved October

9,

=1.940

•

4. Advance payments shall

be

made hereunder only after

care

fu l scrutin;;r to determine that such paymentG will promote the national

interest and. under such

regulations

to that end as the Secretary of War,

the Secretary of

the

Navy, or the United States Haritime Comr.d.ssion may

prescribe.

5. Every con

ract entered into pursuant to this order shall

contain a

warranty

by the

contractor in

substantially the following

terms:

The

contractor warrants

that

he has

not

employed

n ~ r

per

son

to

solici t

or

secure

this

contract

upon

rillY

agreement

for

a commission,

percentage, brokerage,

or

contingent fee.

Breach

of this warranty

she.ll

give

the Governinent

the

right to annul

the contract, or, in

i ts discretion, to

deduct from

the con

tract

price

or consideration

th.;:: rullount of

such commission,

percentage, brokerage, or contingent

fees.

This warranty shall

not apply to comrnissions payable b v

contractors

upon

contracts

or sales secured or

made

through bona

fide

established commer

cial or

selling

agencies m ~ i n t a i n e d by th8

contractor

for the

pt<rpose of securing business.

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6. Hothing

herein

st1all be construed

to

authorize the cost

plliS-a-percentage-of-cost system of contracting.

7.

Nothing

herein

shall

be

construed

to authorize

any

con

t racts in violat ion of

existing

law relating to limitation of profi ts ,

o::.

 

the payment of a fee in excl:iJSS of such limitation

aa

may be specif i

cally sot

forth in the

act

appropriating

the

i unds

obligated

u a.

con

t ract In the absence

of such limitation, the fix0d

fee

to

bG pt:.id

the Contractor as a

result

of n ~ y

cost-plus-a-fixed-fee

contract en

ter,_;d into under the authority of this Order

shall

not e x ~ e e seven per

centum of

th. -:; estimati.:d

cost of the contract

exclusive

of t ~ ~

f8e

as

d ; t e ~ m i n e d

by the Secretary·

of

i Jar, the Secretary of the Na.v;,r, or the

United States

IliarHime Commission, as the

case

;nay

be).

8.

Ho

contract

or

modification

or

amendment

thereof

shal l

be

exempt from

the

provisions of

the Walsh-Healey

Act 49 Sto.t. 2036) be

cause of

being

entered

into

without advertising or competitive bidding,

and the provisions of such e.ot, the Davis-Bacon Act, as amGnded 49

Stat . lOll) , the Copeland

Act, as a..rnended 48 8-t:.at.

9 ,.8),

a.nd

the

Eight

Hour Law, as amended

by

the Act of September

9,

1940 Public No. 781,

76th

Congress)

i f othorwisv

applicai.Jle r;ht.:.ll appJ.y to contracts made

and performed undC:lr th :J autho1·ity of th i s Order.

FRANKLIN D. ROOSEVELT

The White House,

5