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U. S. BUILDING SIXTEEN CITIES CURBS GRAFT
IN ARMY CANTONMENT CONTRACT
BY BASIL MANLY
Washington, June 23. Uncle
Sam has let contracts and work has
already started on the greatest city
building program in the world's his
tory. Sixteen cities, each bigger than
Lexington, Ky., and with a combined
population as large as Cleveland, are
to be constructed before Sept. 1.
Their construction will cost more
than was spent on the Panama canal
in any one year.
It offered the biggest chance ever
known either for colossal graft or for
a brand new record in the conduct of
government business.
There is no time to use any of the
old-time safe and sane anti-graft de
vices. These cities cantonments
for the selective service army must
be ready by September or the whole
military program is disorganized.
Under the old system of competitive
bids, it would be September before
the contracts were written and Oc
tober before the work began.
- So Uncle Sam adopted the plan
used by big corporations on ' rush
jobs, paying the cost of materials
and labor, plus a reasonable profit,
with some new wrinkles which make
the contracts as nearly graft-proof
as possible.
Under the ordinary scheme of pay
ing on the basis of "cost plus per
centage profits," the profit percen
tage remains the same no matter
how high the cost run. This makes
it to the interest of the unscrupulous
contractor to run costs up.
The first thing Uncle Sam did was
to arrange it so that the percentage,
got smaller as the cost got larger.
For example, the percentage on a
contract where the cost is under
$100,000 is 10 per cent, but if the
cost is over $125,000 the contrractor
get only 8 per cent
Ordinarily this jyotU4.he consitj.-.
ered a good enough antidote against
graft, but the men who drew up the
contracts for the government went
further.
The contract schedule provides for
a diminishing profit percentage, but
calls for lump-sum payments within
certain limits. For example, where
the cost is between $100,000 and
$125,000, a lump-sum fee of $10,000
goes to -the contractor.
These lump-sum payments provide
an automatic check on the level of
the cost. Suppose a contractor is on
a job that ought to cost around
$100,000. He can make his $10,000
profit if he gets the job done for
$100,000; but lie doesn't get a cent
more unless he pads the cost to run
over $125,000. And after he reaches
$125,000 he drops down to an 8 per
cent profit basis. He wouldn't get
any considerable extra graft unless
he ran costs up around $150,000.
It is easy to pad a contract to in
crease the cost by a quarter or a
third, but when it comes to jumping
the cost a half or two-thirds it is too
easy to detect and brings a man just
a little too close to the doors of the
penitentiary to be comfortable.
As a final check it is provided that
no matter Row high the costs run, '
Uncle Sam will in no case pay a con
tractor more than $250,000 profit
Just as effective as these automat
ic checks against graft, however, is
the scrutiny given the records of ev
ery applicant contractor. If there is
a shady spot in his record, he doesn't
get the job.
It is possible in the rush some
grafting will be'done for there is no
known method of making angels out
of contractors, either dead or alive,
but the man who tries it will be run-'
ning a big risk.
SCHEDULE OF CONTRACTORS'
FEES FOR WAR CITIES
If the cost ot the wQrk is uadgj:
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