FISCAL AFFAIRS 219 



special insurance should be provided. If so, the contractor was told about 

 the insurance provided under the Master Policy and was furnished a set 

 of forms. The contractor then sent a request to the Contracting Officer 

 asking for approval for the special insurance, and authority to include 

 premium payments therefor as an item of "actual cost" under the contract. 



This request was required to be supported by a certification that (a) the 

 insurance was necessary for the successful completion of the work, (b) Work- 

 men's Compensation was either unavailable or insufficient, and (c) the con- 

 tractor had obtained from the individual to be insured an executed "partial 

 release." The request was accompanied by the individual application filled 

 in to contain the required information concerning the assured, and the 

 executed partial release. The limit of insurance was $10,000 per individual. 



The contractor's request for approval with its attachments was sent to 

 the OSRD Contracting Officer through the Government representative 

 supervising the particular contract for his recommendation and certifica- 

 tion that the proposed assured was performing extra-hazardous work under 

 the contract in question. Following receipt of approval from the Contract- 

 ing Officer, the contractor forwarded an "insurance notice" to OSRD, which 

 forwarded it to the Company. Upon the mailing of the notice, insurance 

 was effective as of the preceding midnight by the terms of the Master Policy. 

 The Company sent an insurance certificate to the contractor for delivery 

 to the assured, together with a premium invoice payable within thirty days. 

 After payment of the invoice, the contractor billed OSRD on a public 

 voucher for the amount of its expenditure. 



Clearance Prior to Final Payments 



Article 2(a) of the standard OSRD contract authorized the Contracting 

 Officer to withhold all or any part of the final reimbursement payment 

 until receipt of the reports required under the contract. In a few cases there 

 were differences of opinion between contractors and the OSRD as to the 

 meaning of the term "final" payment. In order to secure reimbursement 

 promptly and in the largest possible amount certain contractors conceived 

 the idea of covering in two vouchers what would normally have been the 

 final payment voucher; and they insisted that the OSRD approve for imme- 

 diate payment the one covering the larger portion of the total amount as a 

 prefinal payment, leaving OSRD with a final payment voucher in an in- 

 significant amount. This procedure would obviously defeat the purpose of 

 the withholding provision — to stimulate the contractors to comply promptly 

 with the provisions of the contract. 



To meet this situation the practice was adopted of withholding an amount 

 not to exceed 10 per cent of the total dollar value of the contract concerned, 

 but not less than $1,000 nor more than $50,000, until the contractor had 



