AETICLE X This contract shall be subject to the written approval of the Contracting Officer who executed the principal contract, or his duly authorized representative, and shall not be binding until so approved. ARTICLE XI The following changes were made in this agreement before it was signed by the parties hereto: Article II, page 2, changed to read as follows: "All necessary repairs to equipment shall be made by the Lessee without cost to the Lessor. All gasoline and oil for the operation of such equipment will be furnished by the Lessee. Said equipment to be returned in as good condition as when received by the Lessee, excepting ordinary wear caused by ordinary use." Article V, part A, changed to read as follows: "The Lessor shall be paid at the rate prescribed in Schedule "A". The rental period shall begin on the delivery of such equipment to a common carrier for shipment to the site of the work, as evidenced by the Bill of Lading covering such shipment, and shall terminate, unless title to the equipment passes to the Government at an earlier date, on the date of delivery of such equipment to a common carrier, for shipment from the site of the work, as evidenced by the Bill of Lading covering such shipment, provided such equipment is delivered without delay after notice by the Lessee or the Contracting Officer, of the principal contract, to the Lessor that such equipment is no longer required; otherwise the rental shall terminate on the date of such notice. If such equipment is not in sound and workable condition when it arrives at the work site the rental period therefor shall not begin until such equipment shall have been placed in sound and workable condition at the expense of the Lessor. No transportation charges for the shipment thereof shall be paid by the Lessee for any piece of equipment which arrives at the work site in other than sound and workable condition if such piece of equipment cannot be placed in sound and workable condition. The determination as to whether such equipment is in sound and workable condition shall, in every instance, be made by the Contracting Officer or his duly authorized representative. Any delays in the use of any piece of equipment caused by necessary minor, major, or field repairs and replacements shall not interrupt the rental period." In witness whereof, the parties hereto have executed this agreement as of the day and year above written. Witness: (1) Susan R. Ham. (2) Ruth Forrester. L. T. MAURICE, Lessor. By L. T. MAURICE, Fort Smith, Ark. Milan, Tennessee. I, L. T. Maurice, certify that I am the owner named as the Lessor herein; that I, L. T. Maurice, who signed this agreement on behalf of the Lessor, was then owner. I, certify that I am the secretary of the corporation as the Lessee herein; that who signed this agreement on behalf of the Lessee, was then of said corporation; that said agreement was duly signed for and in behalf of said corporation by authority of its governing body, and is within the scope of its corporate powers. Corporate seal. Approved: Place (Name) (Title) (To be executed by the Contracting Officer who executed the principal contract named herein, or his successor or his duly authorized representative.) CERTIFICATION We, The H. K. Ferguson Company, A Corporation existing under the laws of the State of Ohio, and the Oman Construction Company, a partnership of Nashville, Tennessee, having entered into a joint venture under agreement dated the 31st day of December, 1940, to build the Wolf Creek Ordnance Plant, for the United States Government, hereby certify, by our authorized agents, that Mr. C. G. Atkin has been appointed Project Manager of said Wolf Creek Ordnance Plant and that he has had authority since December 31, 1940, to bind the H. K. Ferguson Company and the Oman Company in all matters pertaining to the construction of the said Wolf Creek Ordnance Plant and that he will continue to exercise such authority until the Government has received a revocation of such powers. In witness whereof, we have hereunto affixed our hands, this 29th day of April 1941. Stirton Oman, Partner (Signed) JOHN OMAN ÍII John Oman III, Partner (Signed) JOHN OMAN, Jr. John Oman, Jr., Partner Signature of C. G. Atkin. (Signed) CHARLES G. ATKIN Witnessed: (Signed) PAUL M. BREWER Paul M. Brewer, Major, QMC, CQM. (Signed) ABE PLETCHNOW Abe Pletchnow, 2206 E. Main, Humboldt, Tenn. NOTE. This is an exact copy of signed original that is held in office of FergusonOman Company, and Constructing Quartermaster's office. #561 M-F "In some cases the owners of equipment rented directly to the Government, or the rental on which is paid indirectly by the Government, have through carelessness or otherwise neglected to submit in the statements prepared by the Lessors, the correct amount or amounts of the lien or liens on this equipment. The seriousness of such acts of carelessness or negligence cannot be over-emphasized. Section 35 of the Criminal Code as amended provides: "Whoever shall make or cause to be made or present or cause to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, any claim upon or against the Government of the United States, or any department or officer thereof, or any corporation in which the United States of America is a stockholder, knowing such claim to be false, fictitious, or fraudulent; or whoever, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, or for the purpose and with the intent of cheating and swindling or defrauding the Government of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, shall knowingly and willfully falsify or conceal or cover up by any trick, scheme, or device a material fact, or make or cause to be made any files or fraudulent statements or representations, or make or use or cause to be made or used any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, shall be fined not more than $10,000 or imprisoned ot more than ten years, or both.'" #77 M-F In ink: Exhibit #2 signed by John Ralls for identification.-John Ralls In Reply Refer to QM 300.5 C-O (General) CONSTRUCTION DIVISION LETTER No. 154 Subject: Procedure for Handling Rental Equipment. All Constructing Quartermasters. I GENERAL 1. Construction equipment and machinery used on cost-plus-a-fixed-fee projects will fall into two categories. The first is that rented from principal contractor, and the second is that rented from third party lessors. While certain general principles concerning the administration of matters in connection with rented equipment are applicable to both categories, a distinction must be drawn between the two categories at all times, in view of the fact that equipment which is rented from the contractor is rented under Article II, paragraph 2, of the costplus-a-fixed-fee contract, whereas that rented from third party lessors is rented under a separate form known as "Equipment Rental Agreement." The rights of the owner of the equipment are governed by the instrument under which the equipment is rented, and since the two instruments differ, it is obvious that the rights of the parties will be different in some respects. 2. Reports on Equipment now being rented.—In order that accurate information will be available on all construction equipment being rented, the C. Q. M. will submit to the Zone C. Q. M. office, as soon as possible, a report fully identifying all equipment now being rented on your project, regardless of the ownership of that equipment. Thereafter, a monthly report of changes will be submitted as of the last day of the month. This report will be made in accordance with Form A attached. The Zone C. Q. M. will submit a consolidated zone report to this office monthly showing status of equipment on all projects as of the last day of the month. 3. Liens on Rental Equipment.-Attention has previously been called to Section 35 of the Criminal Code as amended and the penalties set forth therein for presenting fictitious or fraudulent claims against the Government. All contractors should be made aware of this provision of the Criminal Code and there should be attached to all Equipment Rental Agreements the statement set forth in Construction Division Letter No. 71, dated February 4, 1941. The procedure to be followed in verifying the owner's statement as to outstanding liens is set forth in paragraph 2 of Construction Division Letter No. 71. Rental should be paid to the owner of any equipment to the amount of the agreed valuation on the equipment. However, the Construction Quartermaster should at all times assure himself that any rental payments made in excess of the value of the lessor's equity are being applied to satisfy any outstanding liens or encumbrances on the equipment. If it is learned that such payments are not being applied by the lessor to the satisfaction of outstanding liens or encumbrances, this office shall be promptly notified and all further rental due impounded, pending receipt of instructions from this office. 4. Valuation of Rented Equipment.-Regardless of ownership, a valuation must be placed on each piece of equipment upon its delivery at the job site and such a valuation should be made with careful reference to delivered cost, the age and condition of equipment. Both the standard "Equipment Rental Agreement" and the "Cost-Plus-A-Fixed-Fee" contract allow ten days for revaluation after delivery of equipment. A complete inspection, therefore, should be made as soon as the machinery is delivered and if the owner's valuation is' questionable, the matter should be settled within the ten-day period. If an amicable agreement cannot be reached with the owner, the matter should be reported to the Zone Constructing Quartermaster as soon as possible. 5. Procedure for Registering Recaptured Vehicles.—(See Construction Division Letter No. 52, dated January 30, 1941.) The following procedure will be followed on all trucks, passenger cars, reconnaissance cars and construction equipment recaptured by the Government: (a) If the owner of the equipment has a certificate of title issued by a State, the Constructing Quartermaster shall, prior to making final payment, obtain an assignment of this title to the United States of America. If no such title is in existence, a written release of title shall be obtained from the owner, stating that title to the equipment has passed to the United States of America and certifiying that the equipment or vehicle is free from any and all liens or encumbrances. (b) Upon receipt of title, or written release, the Constructing Quartermaster will enter this vehicle on a receiving report, Form W. D., Q. M. C. No. 431. This form shall be made in quadruplicate, two copies being submitted to the Finance Officer with vouchers, one copy to the stock record account of the accountable officer, and one copy for the file of the Constructing Quartermaster. (c) Where a vehicle or piece of equipment is recaptured, as opposed to outright purchase, the procedure shall be as follows: (1) After completion of receiving report Form No. 220 will be completed and sent to the Motor Transport Division, Office of The Quartermaster General. Form No. 220 should be dispatched without delay as registration numbers are issued from data presented on Form 220. (2) Passenger cars will be given registration Plate Numbers and, until such plates are received from the Holabird Quartermaster Depot, a temporary plate can be devised on the project. Trucks and reconnaissance cars do not take registration number plates. Plates will not be used on trucks. (3) Stenciling as described in Army Regulations 850-5 will be accomplished except the color will be blue drab lusterless enamel or white. 6. Lubrication of Machinery.-Machinery Manufacturers' Directives, relative to the lubrication of machinery will be followed. This is particularly important in Diesel engines where the use of a corrosive grade of lubricating oil is highly injurious. 7. Notification of Intent to Recapture.-When it has been determined by the Constructing Quartermaster that any piece of equipment should be recaptured, the Constructing Quartermaster will advise this office, through the Zone Constructing Quartermaster, of the items of equipment recommended for recapture, giving complete description, full information as to balance due, the recapture value, the present value, the mechanical condition of the equipment, and availability of funds for recapture. The approval of the recommendation, or disapproval will be immediately transmitted to the Constructing Quartermaster through the Zone Constructing Quartermaster. 8. The mechanical equipment section of the Operations Branch is available for such consultations or other assistance as may be desired by Zone or Local Constructing Quartermasters. II. CONTRACTOR-OWNED EQUIPMENT 1. Rates of rental. For the purpose of determining rental to be paid contractors for equipment owned by them, Rental Schedule W. D., O. Q. M. G., July 1940, shall prevail and there shall be no departure from this schedule without prior authorization of this office since the contractor's fee was in part based on this schedule. Any reluctance of the contractor to rent equipment to the Government at the rates set forth by this rental schedule shall be promptly reported to the Zone C. Q. M., with recommendations and a complete recital of all the facts of the controversy. The Zone C. Q. M. may in turn refer the matter to the Mechanical Equipment Unit of the Operations Branch. The manner in which rental on a specific case is computed and the method of completing blank spaces on the rental schedule are fully explained in memorandum from the Office of The Quartermaster General, dated December 16, 1940, titled, "Administrative Instructions Relating to Procedure for Machinery Rental on cost-plus-a-fixed-fee contracts". These instructions were forwarded as an inclosure to Fixed Fee Letter No. 35, dated December 17, 1940. 2. Recapture of Contractor-Owned Equipment.-The recapture of contractorowned equipment will be carefully supervised by the Zone Constructing Quartermaster. Such equipment may not be recaptured until work under the construction contract is completed, the construction contract terminated, or the rental paid equals the stated valuation plus one per cent per month for each month or fraction thereof equipment has been in use. In those instances in which the work under the construction contract has been completed or the construction contract terminated, equipment shall not be recaptured by the payment to the lessor of the difference between rental paid plus one per cent per month and the valuation declared at the time the equipment was brought on the job, unless conditions (a) and (b) and either (c) or (d) below are met. (a) Government has sixty per cent or more equity in the particular piece of equipment. (b) The equipment is in sound mechanical condition and worth appreciably more than the difference between the rental paid and the valuation, plus one per cent for each month the equipment has been used. (c) The equipment is actually needed and can be usefully employed. (d) The equipment is needed at a nearby project for construction purposes and the owner refuses to transfer it with the Government retaining its accrued equity. Construction funds will be reimbursed at a later date by maintenance funds for all expenditures made in connection with the recapture of equipment for maintenance purposes. A careful record of these expenditures will be kept available for submission to the Operations Branch on call. Careful supervision will be maintained by both the local and Zone Constructing Quartermasters in order that any equipment not to be recaptured may be promptly released when there is no longer an actual need for it. III. THIRD PARTY-OWNED EQUIPMENT 1. The Zone Constructing Quartermaster will supervise and assist the constructing quartermasters in all matters pertaining to rental of equipment, from third party lessors. This assistance shall include the review of all equipment rental agreements prior to approval by the Constructing Quartermaster. The Mechanical Equipment Section of the Operations Branch of the Washington office will act as a central clearing agency for all matters pertaining to the procurement of equipment, rental rates, recapture of equipment and transfer between zones. 2. Equipment Rental Agreements. The standard Equipment Rental Agreement (Stencil No 40/2111) will be executed before any equipment owned by a third party is used on any project and the Constructing Quartermaster must assure himself that this standard form has been properly executed prior to the time the equipment is used. 3. Rental Rates.-The Mechanical Equipment Section of the Operations Branch has assembled statistics on rental rates from all over the country and is in a position to advise all interested parties of prevailing rates. In order that contracts involving excessive rental rates may be avoided, the local Constructing Quartermaster shall whenever time permits, forward to the Operations Branch, with a copy to the Zone Constructing Quartermaster, a copy of each invitation for bids for rental equipment as soon after the issuance of the invitation as possible. The Mechanical Equipment Section of the Operations Branch and the Zone Constructing Quartermaster will endeavor to place in the hands of the Constructing Quartermaster, prior to the bid opening, information on rental rates for similar equipment which may be available and will also notify prospective bidders who might not otherwise be reached. Information received as the result of this procedure should be carefully checked against local bids before the award is made or authorized to see that the interests of the Government are protected. There has been adopted, as a general guide on rental rates, the Associated General Contractors' Schedule of Rates, dated July 1938. If at any time it becomes necessary to pay rates in excess of those set up in this schedule for third party-owned equipment, a report 311932-42-pt. 9—38 |