THE CONTRACT 197 



ditions of their use are discussed in the chapter on patent poUcy (Chap- 

 ter XV). 



Article 6. Article 6 Hkewise had alternative forms. The form given in 

 the appendix was that used in classified contracts. In contracts v^'hich were 

 not classified, the article on security provisions consisted merely of those 

 clauses which are designated (b), (d) and (e) in the article printed in the 

 appendix. The security provisions are considered at some length in Chapter 

 XVII. 



Article 7. The insertion of the provisions of Article 7 was required by 

 the statutes and executive orders under which OSRD operated. 



Article 8. This was another article the insertion of which was required 

 by law in all contracts involving production. It was not required or inserted 

 in contracts of a purely research type not involving the employment of 

 laborers and mechanics. 



Contracts for Procurement 



In the early days of NDRC its contracts were for research and the con- 

 tract form devised for that purpose was adequate. As results began to flow 

 from research, NDRC had need for another type of contract which would 

 take into account the different type of facilities demanded. By July 1941, 

 a simple purchase agreement form had been devised for the few cases re- 

 quiring its use. The purchase was usually for a fixed price and the agree- 

 ment included a description of the articles to be purchased, method and 

 date of delivery, method of payment (usually installment), provision for 

 purchase by OSRD from another source if the contractor defaulted, right 

 of OSRD to make changes in drawings and specifications with provision for 

 any necessary adjustment of price, assumption of risk by contractor until 

 delivery, security provisions, and public policy provisions. 



As more and more of the OSRD work passed from the research and 

 development stage into that of limited procurement, OSRD contractors and 

 prospective contractors began to question the applicability of the "no-profit- 

 no-loss" policy. Recognition was given the situation by Bush in a memo- 

 randum of June 7, 1943, discussed in the chapter on fiscal affairs (Chapter 

 XIV), which laid the basis for profit on research and development contracts 

 having procurement aspects. 



Standard Form 1002 was adopted to meet the situation discussed in the 

 Bush memorandum. Many of its provisions were identical with those of 

 Form 1 00 1. The principal differences were the more exact description of 

 the articles to be delivered and the establishment of a fixed price together 

 with provisions for keeping it in line with the contractor's actual cost plus 

 a reasonable profit. 



