PURPOSE.

The United States Housing Corporation was formed primarily for the purpose of housing the surplus of war workers called from all parts of the country to the congested centers where war machinery was busy night and day producing materials for war purposes. In time of peace construction efficiency means economy; in war time efficiency means speed. The Construction Division was given the problem of building the necessary shelter for war industry workers, furnishing as much comfort as economically possible but with speed as the main object. The first plan worked out was to utilize all houses and buildings already constructed in each locality needing more housing. This was done in every way possible-vacant houses for rent were listed in local registries; where necessary houses were commandeered or acquired by lease; and under the Construction Division repairs and alterations were made to make them tenantable. Hotels were purchased, remodeled, and used to house workers.

The final method of meeting the needs of the community, where other devices could not solve the problem, was by the acquisition of land and construction of houses thereon. Where the other methods mentioned above were inadequate it was necessary for the Housing Corporation to embark upon the building of houses for the accommodation of war workers, and in some instances this practically involved the building of complete new communities. Each enterprise was termed a "project." Before determining upon the construction of permanent houses in such a project, however, the corporation satisfied itself, after careful

investigation, as to the industrial stability of the community and the probable existence of a normal population in non-war times which would justify such an addition to the local housing so that the enterprise would be a safe investment.

Permanent construction in such a project usually included all the house combinations, single, double, or grouped in varying numbers in rows, boarding houses, apartments, and sometimes dormitories. Dormitories, however, have been employed only where there was the clearest assurance of their being urgently needed, where great speed was essential, and especially where the nature of the industry indicated an unstable post-war existence.

While these plans were being formulated by the engineers, town planners, and architects, the Construction Division, which was to act in the capacity of a general contractor for all the different projects, was busy creating an organization to do the actual construction work.

The formation of the Construction Division began about March 15, 1918. The details of organization were not decided upon until the latter part of April, as the Bureau of Industrial Housing restrained the activities of this division until a definite policy of action could be determined. This policy, in turn, was dependent on congressional action and had to await passage by Congress of the bill authorizing the activities of the bureau.

In the meantime, the problems incident to the handling of a great volume of separate and diverse projects over a wide area, for which no ordinary con

tracting experience offered an exact precedent, disclosed themselves. As the magnitude of the work became evident, it was found necessary to frame and create the nucleus of an administrative staff and to secure the services of well-qualified men as chiefs of different branches in order to be prepared for the anticipated requirements when actual construction work should proceed, and also to prepare for the formation of the field executive staffs.

ORGANIZATION.

The Construction Division as fully organized at the time of the signing of the armistice consisted of the following executives and divisions:

General executive:

Manager.

Seven traveling supervisors.

Three assistants to the manager.

Contract section.

Assistant manager.
Field organizations.
Branches:

Cost-report engineers.
Materials procurement-
Materials section.
Requisition section.

Priorities section.

Traffic section.

Emergency and powder-plant construction.
Repairs.

To handle the surplus materials resulting from the cancellation of projects after the signing of the armistice and to negotiate settlements with contractors and vendors for work and materials canceled, two more branches were added: Adjustment committee and sales branch.

In the personnel list accompanying this report are given the names of all those who from time to time held the various positions named. (See Vol. I, Appendix III.)

The manager not only supervised the general work of the division but also controlled the policies and directed the activities of all branches and sections. All directions to those in the field had to receive his approval. He selected all contractors in the manner hereinafter described; he interviewed all bidders, heard and adjusted all complaints, and passed on all reports. For a while he also personally supervised all mail. When this task became too great for one man, in addition to his other duties, part of the work was taken over by the assistant manager. No letter or telegram was allowed to leave the office until it had been personally read and approved by either the manager or one of his assistants.

The general policies to be observed by the field forces were controlled by the manager through the traveling supervisors. The details of field work were

under the direction of the assistant manager. He controlled the work through the project managers, who were in fact district managers, each having general supervision of and responsibility for the projects in a given territory.

The manager's three assistants aided him in handling the mail, in consultation and interviews, and in the preparation of orders for changes in the field work. They also kept general check on the relative progress and costs of the projects for the purpose of keeping the field work as close as possible to schedule as to both time and cost.

The following composed the executive personnel of the Construction Division at the time of the armistice: Manager..... Daniel T. Webster. William C. Lewis. W. J. Thistlewaite. .T. E. Videto. Wm. C. Bradbury. .H. McLaren.

Assistant manager.... Assistant to manager

Assistant to manager.

Assistant to manager.

Chief, contract section

Coordinating officer..

Chief, cost-report engineer branch..
Chief, materials procurement branch.

Chief, materials section...

Chief, powder-plant construction branch.. Superintendent, repair branch

Chief, requisition section

Chief, traffic section...

Maj. James E. Schuyler.

.J. C. Prior. .C. Birdseye. .G. A. Porter.

W. S. Painter. .Capt. A. T. Moore. .A. M. Worthington. Sidney King.

TRAVELING SUPERVISORS.

Directly under the control of and reporting to the manager was a corps of traveling supervisors, who spent their time on the road and whose business it was to see that the work was carried out well, rapidly, economically, and without friction. They heard all complaints and all disputes between the contractor's and the Government's forces, and in so far as possible settled these in the field.

The traveling supervisor's functions are best shown by the following extract from the manual of instructions issued to each supervisor by the manager:

The manager of the Construction Division will appoint competent men, to be known as traveling supervisors, who will be vested with authority to represent the manager in the field.

Certain defined projects will be assigned to each supervisor, who will visit each project periodically.

The supervisor will be authorized to adjust and settle differences of opinion between the works superintendents and the contractor, defining the policies of the corporation and interpreting the contracts when called upon to do so.

After the contract is awarded, the project manager, works superintendent, and contractor, or his representative, shall meet in conference with the traveling supervisor relative to a program to be followed out in the execution of each contract. The minutes of these conferences shall form the basis for the operative plan and are to be submitted to the manager of the Construction Division for approval. Thereafter the project manager, works superintendent, and contractor shall confer with the traveling supervisor, individually or in joint conference, as the traveling supervisor may elect, so that he will be thoroughly conversant with the various questions or decisions that may arise.

The traveling supervisor shall arrange to preside at conferences o be held at the site at a stated time each week, and his decision

and an extract of the important parts of the minutes of such conferences shall be considered as decisive, subject, however, to an appeal to the proper authority at Washington.

When occasions arise wherein it is deemed advisable on the part of the supervisor to make changes of plans and specifications in order to effect economies or facilitate the progress of the work, it is deemed advisable that the supervisor shall discuss these matters with the architects or engineers and obtain their concurrence, or if there is a difference of opinion the matter shall then be referred to Washington for final decision.

The main idea of having a traveling supervisor is to centralize the authority in the region to which he is assigned and to assist the works superintendent to adjust differences of opinion between the contractor and himself, as well as to obtain the result of his major duties in regard to the execution of the work in an economical and diplomatic manner.

The following were the traveling supervisors: G. B. Beaumont, A. M. Ganson, Walter Reid, jr., J. M. Murphy, J. H. Nolan, M. C. Reynolds, and J. C. Vreeland.

LETTING CONSTRUCTION CONTRACTS.

As a necessary adjunct to the actual work of construction in a corporation undertaking building operations of such a magnitude as was contemplated by the United States Housing Corporation, it must be easily appreciated that not the least important part of the labors connected with this work was awarding of the contract itself; to make proper award is a matter of sufficiently serious consideration to any one engaged in building work; to make an award under Government supervision with funds furnished by the Government under regulations more or less stringent needs more than ordinary care.

One of the most important items of the Construction Division's work was the selection of the contractor. Conditions made it necessary to select a contractor for a given project before the drawings and specifications were entirely completed, and there were certain war restrictions imposed upon the corporation in the purchase of materials and the securing of labor which made it impossible to follow usual peace-time methods of competitive public bidding and still keep within reasonable bounds as to cost. A method was therefore devised to enable us to make the best selection as to responsibility and low cost on a truly competitive basis. This method comprised, first, the compilation of a list of available contractors within a reasonable radius of the project. Private and confidential reports concerning the financial standing and business ability of these contractors were secured, together with statements as to other Government contracts upon which they were then engaged, it being the desire of the management to secure as contractor one who would be able to give his undivided attention to the work in hand. Questionnaires were then sent out to all contractors making application to the corporation in Washington and to those whose names were given to us,

These contractors were then investigated, their financial standing inquired into, and other inquiries made to establish their ability to handle the class of work contemplated. Through the courtesy of the emergency construction committee of the Council of National Defense, we were able also to make use of their questionnaire files and data. Bradstreet's and Dun's reports were referred to for the financial standing of those under investigation. Confidential agents made particular inquiry of those who were not otherwise known to the officials of the corporation, and every effort was made to put on the available list only contractors who could show that they were reliable, capable, and qualified to undertake the contracting management of our work. When the Production Division delivered to us the drawings and specifications for a project, five or more contractors who were located within a reasonable radius of the project were selected from the available list by the manager and submitted to the president of the corporation for his approval. These were then furnished with drawings, specifications, and all necessary data to enable them to understand the scope of the contemplated work and to make estimates of plant and time requirements, cost, and fee. The list of these selected was in each special instance made up from the contractors best suited for the particular class of work contemplated, bearing in mind the location of the work to be done and, as a general rule, making an effort to select contractors familiar with the locality and the conditions to be met at the place where the construction work was to be done. As a result of this method of selection the keenest competition existed among the contractors selected as best suited to handle the work in hand, and real competition was obtained at a time when labor conditions as well as the market for materials made ordinary contracting methods quite unsuitable and accurate estimating almost impossible.

Lump-sum contracts were practically out of the question, save in a very few instances, and no reliable contractor at the time would bid on a lump-sum basis unless his bid carried an assured profit out of all proportion. The system of cost plus a fixed fee and fixed plant rental was therefore adopted, the contractor's estimate of the entire cost of the work being recognized and accepted as purely tentative and subject to conditions over which he necessarily would have no control. It placed upon a competitive basis the only items in regard to which real competition could exist, namely, his contracting experience, for which he was paid a fee or practically a retainer, and the use of his plant, which, as a general contractor, he would have or be in a position to obtain. It eliminated entirely the principle of cost plus percentage contracts, in accordance with instructions from Congress. We considered the principle of cost plus a fee to be sound, since it tends to reduce the speculative

spirit on the part of a contractor, eliminates the possibility of an excessive profit, places the cost of the work where it properly belongs, on the owner, and tends to make more stable the general principle involved in the award of a contract-that the owner shall pay for the work done and the contractor be remunerated for his services. (See also report of Legal Division, p. 352.)

Under the act of Congress by which the Housing Corporation came into being we were precluded from awarding any contract unless competitive bids had been obtained from at least three contractors. We obtained competitive bids from as many as twelve contractors on many of our projects, and designed what has been said to be "an impartial attempt along scientific lines" to secure the best available contractor at a time when the Government controlled the money market, the material market, and the labor situation. In addition, the penalty and bonus clauses in our contract created an incentive to the contractor to keep down his costs. The award of the contract was made to that contractor whose bid was the lowest in price as to fee and plant rental, but where the estimated cost was suspiciously low or the plant rental and fee so low as not to give the contractor a fair return for his labor or where the bid showed inability on his part to form a correct estimate of the work to be done, we were enabled to make our award to that contractor who, in our opinion, came under the provision of the act of Congress which provided that the contract should be let to the "lowest responsible bidder." The men in charge of the Construction Division were all experienced architects, builders, and engineers, and competent in every respect to pass upon the responsibility of the competing builders; in no case has adverse criticism been directed toward us by those who knew the conditions or took pains to examine into the methods employed.

In the award of 60 or more contracts by this division at least 700 individual contractors were selected to bid upon the work, and this in our opinion invited the greatest possible range of competition and secured to this corporation many of the benefits which other departments of the Government had been deprived of.

The form used for submission and comparison of bids is shown on page 214. As will be seen, the total obtainable number of points was 400. Reduced to a percentage basis, the chief items considered were organization, plant, and time, which together counted for 70 per cent, against 30 per cent for cost estimates. It is also to be noted that the possession and delivery of the plant counted for 80 points and its use for rental only 20 points; that is, the contractor who had the plant to use, even though he asked more for it, had the better chance to get the contract, because he was in the better position to carry out the work rapidly. Under the war conditions governing our work

speed was the main consideration, cost being of necessity secondary. In commercial work the markings would probably be more nearly reversed, i. e., 30 per cent for speed and 70 per cent for cost.

The best bid under each item was given the full number of points, and the others were marked proportionately; thus if five months was the best time bid it would be marked 100, six months would be 80, eight months 40, etc.

Estimates were delivered in specially prepared envelopes, stamped when received as to date and time, tabulated and rated by a committee, after analysis, and the results presented to the general manager and president for award based on the construction manager's recommendation. The successful contractor was notified and instructed by the various branch chiefs in methods to which he must conform governing the execution of his contract.

The preparation of the contract itself was no mean task. In an effort to hold the contractor to the highest degree of accountability, while at the same time dealing with him in that liberal spirit which is essential during such strenuous times, it was most important to create in his mind that feeling of cooperation which was vital to the success of our construction program. Copies of contract forms used by other departments were obtained and examined and their best features were incorporated in our contracts. The result has been that our form of contract has attracted the notice of civic bodies, school boards, municipal committees, and private individuals contemplating work in the immediate future and it has been pointed to in many cases as a model. Of its weaknesses we are aware and have been made aware from time to time of the fact that it could be strengthened in many particulars and improved in many of its features, but the conditions under which the governmental agencies operated were so different from the conditions prevailing in private enterprises that it was almost impossible. for any group of men to produce a universally satisfactory form of contract.

The contract form itself was revised from time to time. Originally the contract provided a bonus but no penalty; this was later altered by inserting a penalty clause to act as an additional check on any tendency on the part of the contractor to permit undue expenditures. (See p. 366.)

Probably the weakest point in the contract from a practical point of view was the definition of the plant for which the contractor was paid a lump-sum rental.

Originally this included everything except the permanent work and certain items of lumber for concrete form work and scaffolding. In later forms, a number of other items, such as temporary buildings, roads, etc., were excluded from plant. The definition of plant has remained, however, the principal source of misunderstanding and has been the chief, if not

the only, requirement of the contract which has caused complaint. This is due to the fact that there are innumerable items of a minor nature which do not enter into the permanent work and yet are consumed in the execution of the contract and which it is the custom of the business to charge to the cost of the work and not to plant. The following are items which practically every contractor has protested against paying for as plant: Rubber boots, hose, oil for lanterns, files for sharpening saws, gasoline for torches, tool chests, blacksmith supplies, masons' scaffold plank, and horses. This defect might, however, be remedied by specifically excluding from plant for which rental is paid all items such as the above which are practically consumed on the work. These should be purchased and charged to the cost of the work; any portion not consumed can be salvaged at the completion of the project, as is done with the temporary buildings, office furniture, etc.

In preparation and execution of the contract itself, time was reduced to a minimum by means of our loose-leaf system, whereby all items of the work were grouped together on one sheet, inserted in the contract, and not distributed throughout the body of the contract, as is customary. All the printed part of the contract is grouped together and the contractor at a glance can tell the nature of the work to be done, the time, etc., and further familiarize himself at his leisure as to any points in the body of the contract.

Of particular service has been our abandonment clause, which permitted us almost immediately to cease operations upon the signing of the armistice and to reimburse the contractor upon a fair and equitable basis and to satisfy all dealers in materials and those having claims arising under the contract, so that within 90 days after our operations practically terminated every claim under abandoned work had been brought to such a condition of settlement that our liability could be definitely determined. In no case have we been confronted with the prospect of litigation with its incidental hardships both to the contractor and to the corporation.

LETTING SUBCONTRACTS.

In addition to the general contract, a form of subcontract was also prepared, which in general served all purposes. The general contractor was not permitted to sublet any work without the approval of the corporation and was required to make all subcontracts on one standard form and file them in the Washington office. We thus had complete control of the subcontractors as well as the general contractor. The latter was permitted to make his own selection of those who were to bid on any subcontract, but the corporation reserved the right to reject any bidder it did not consider responsible (as required by act of

Congress) and to direct the award to the lowest responsible bidder.

The subcontract form adopted served its purpose and caused no dissatisfaction or dispute in its interpretation, except in one particular. Article XV, referring to the general contract provisions, is indefinite and has given rise to the claim that special benefits allowed the general contractor, such as the giving of a bonus, are by it carried over to the subcontract and granted the subcontractor. This claim has never been admitted as valid by the corporation.

The subcontract form is somewhat weak in that it attempts to furnish one set form both for lump-sum and fixed-fee contracts, thereby causing some confusion and leading to the claim that the contract contains inapplicable conditions. It would probably have been better to have had two forms, although the use of a single form has in no case resulted in a misunderstanding of sufficient magnitude to cause a dispute as to the amount or method of the work to be done or the payment therefor. It is almost impossible to devise a single form of contract which will suit all conditions.

PROJECT MANAGERS.

A staff of project managers was organized to act as assistants to the assistant manager to follow up the details of each project from inception to completion. To each manager were assigned the projects in a given district-usually from three to six-so that he was in fact the district business manager for the corporation. When it was decided to proceed with a project the manager for that district was notified, and it was his duty to to see that the drawings and specifications were rapidly prepared and that the work of the project architect, engineer, and town planner were properly coordinated. Up to the time when the work was turned over to the Construction Division ready for estimating, the project manager acted as an assistant to the general manager of the corporation. He called meetings of those interested in the project either in Washington or in the office of the architect, engineer, or town planner, as seemed advisable. At these meetings he presided for the purpose of speeding the work; he established, by agreement with those interested, the dates for submission of preliminary and final drawings and specifications; he ascertained what information was needed from the corporation divisions and officials and saw that it was furnished; he reported these meetings directly to the general manager and followed up the work to the end that it should be properly completed in the shortest possible time.

When the work was delivered to the Construction Division the first duty of the project manager was to study the plans and specifications to see that there was nothing omitted; that the architectural, town