United States Army in World War II: The War Department
The Army and Economic Mobilization
by R. Elberton Smith
1959
. . . To Those Who Served
Table of Contents
Part One: Introduction
Chapter 1: The Task and the Achievement
Part Two: Prewar Plans and Wartime Organization
Chapter 2: Background of Interwar Planning
Economic Mobilization in World War I—Planning Responsibility Under the National Defense Act—The Office of the Assistant Secretary of War—The Army and Navy Munitions Board—The Army Industrial College—The Supply Arms and Services—Basic Conception of the Planning Responsibility
Chapter 3: War Department Procurement Planning
The Preparation of Specific Procurement Plans—Determination of Required Types—Computation of Requirements—Apportionment of the Procurement Load—Allocation of Industrial Facilities—Preparation of Facilities for War Production—Consolidation, Approval, and Revision of Plans—General Planning for Wartime Procurement—Legislation—Contractual Instruments
Chapter 4: Industrial Mobilization Planning
Development of the Industrial Mobilization Plan—The Role of Superagencies Under IMP—The Concept of M Day—Functional Aspects of Industrial Mobilization Planning—Supply and Control of Materials—Price Control—Other Problems in Industrial Mobilization
Chapter 5: Organization for War
The Evolution of Central Mobilization Control Agencies—War Department Reorganization for World War II—The Defense Period: Hegemony of the Under Secretary of War—The War Period: Regime of the Army Service Forces
Part Three: Determination of Army Requirements
Chapter 6: Army Requirement Programs: World War I to Pearl Harbor
Nature and Implications of Army Requirements—Army Attrition and Gradual Rehabilitation: 1920 to 1939—The Munitions Program of 30 June 1940—The Victory Program of 11 September 1941
Chapter 7: Army Requirement Programs: Pearl Harbor to War’s End
The President’s Objectives and the War Munitions Program—The Army Supply Program—Background and Mature—Major Developments Under ASP—The Supply Control System—Demobilization Requirements
Chapter 8: The Methodology of Army Requirements Determination
Some General Considerations—Equipment Requirements—Initial Issue—Replacement—Distribution—Requirements for Expendable Supplies—General—Ammunition—Concluding Observations
Part Four: Army Purchasing Problems and Policies
Chapter 9: Survey of Army Purchasing: 1940 to 1945
The Interwar Period—The Defense Period—Pearl Harbor to V-J Day
Chapter 10: Major Issues in Contract Placement
Military Responsibility for Procurement—Development of the Negotiated Contract—Background and Early Use of Negotiation—Controversy Over Competitive Bidding
Chapter 11: General Policies in Contract Placement and Clearance
Selection of Contractors—Army Selection Policies—Criteria Established by Central Control Agencies—Contract Clearance—External Clearance—Internal Clearance—Contract Clearance and Program Control—Evolution of Wartime Pricing Policy
Chapter 12: The Cost-Plus-a-Fixed-Fee Contract
Background and Nature—Classes and Coverage of Army CPFF Contracts—Construction Contracts—Experimental, Research, and Developmental Contracts—Service and Time-and-Material Contracts—Cost-Plus-a-Fixed-Fee Supply Contracts—Administrative Control of Fixed-Fee Contracts—The Conversion of CPFF Contracts
Chapter 13: Pricing in Fixed-Price Contracts
Price Analysis—Instruments of Price Analysis—Price Comparisons—Cost Analysis—Price Adjustment Under Contractual Articles—Escalator Clauses—The Redetermination or Ceiling Article—The Price-Revision Article—The Development of Progressive Pricing—The Incentive Article; Other Changes
Chapter 14: Multiple-Contract Pricing Review: The Company Pricing Program
Inadequacies of Individual Contract Pricing—Adoption of the Company Pricing Program—Procedures and Results of Company Pricing
Chapter 15: Contract Renegotiation: Origins and Basic Procedures
The Background of Statutory Renegotiation—Basic Provisions of the Renegotiation Law—The 1942 Act and Amendments—The Renegotiation Act of 1943—Organization for Renegotiation—The Renegotiation Process—Principal Features of Renegotiation—Identification of Renegotiable Sales—Renegotiation of CPFF Contracts
Chapter 16: Renegotiation: Principles and Policy
Definition and Measurement of Renegotiable Profits—Income and Profit Taxes—Reconversion Reserves—Tax Amortization and Renegotiation Rebates—Exemptions From Renegotiation—The Determination of Excessive Profits—Development of Criteria Under the 1942 Act—Factors Listed in the 1943 Act—Application of the Factors—Renegotiation Statistics—Concluding Observations
Chapter 17: The Army and OPA Price Control
Background and Nature of OPA Price Control—The General Maximum Price Regulation—Specific Price Regulations Affecting Procurement—General Exemption of Military Items From OPA Controls—Procurement Problems Arising From Price Ceilings—An Industry Case Study: Canned Meats—Relief of Individual Contracts From Price Control—Concluding Observations
Chapter 18: The Army and Small Business
Emergence of the Small Business Problem—Early Attitudes and Efforts of the War Department—Small Business Policies of NDAC and OPM—The Small War Plants Program in Transition—Slow Beginnings Under the Small Business Act—The Formative Period of Army-SWPC Relations—The Small War Plants Program in High Gear
Part Five: Expansion of Facilities for the Army
Chapter 19: General Aspects of Facilities Expansion
Prewar Planning and the Crisis of 1940—Land Acquisition by the War Department—War Department Command Facilities—Facility Clearance Procedures
Chapter 20: Private Industrial Expansion Under Tax Amortization
Background of the Amortization Law—Administration of the Tax Amortization Program—Organization and Procedures—Criteria of Necessity—Non-reimbursement and Government Protection—Transfer of the Certification Function—The Record of Plant Expansion Under Tax Amortization
Chapter 21: Government Financed and Owned Industrial Facilities
The Emergency Plant Facilities Contract—Defense Plant Corporation Facilities—Origins of DPC Financing—Basic Terms of DPC Contracts—War Department Take-Out Arrangements—Operation and Administration—Advantages of DPC Financing—The Results of DPC Financing—War Department Owned Facilities
Part Six: Production and Material Controls
Chapter 22: Establishment of the Priorities System
Introduction—Inauguration of the Priorities System—Evolution of Civilian Priority-Control Agencies—The Advisory Commission—The Office of Production Management—The Supply Priorities and Allocations Board—The War Production Board—Changes in the Basic Rating Structure—Priority Directives in the Defense Period—Major Developments After Pearl Harbor
Chapter 23: Priorities: Problems in Application and Operation
The Critical List and Preference-Rating Extensions—Inter-service Discrimination; Abolition of the Critical List—Other Problems in the Operation of Priorities—Extent of Preference Accorded Higher Ratings—Higher-Than-Routine Ratings—Compliance Problems and Procedures
Chapter 24: Material Controls in Transition
Allocations and Scheduling—The Production Requirements Plan—Special Procedures for Machine Tools
Chapter 25: The Controlled Materials Plan
The Adoption of the Controlled Materials Plan—Basic Features of CMP—Army Preparations for Launching CMP—The Determination of Requirements for Basic Materials—The Allotment of Controlled Materials—The B-Product Controversy
Chapter 26: Other Measures for Control and Conservation of Materials
Miscellaneous Controls—Component Scheduling—Export Controls—Government-Furnished Materials—Importation and Stockpiling—Conservation of Materials
Part Seven: Contract Termination and Settlement
Chapter 27: Contract Termination: Background and Preparations
Nature and Implications of Contract Termination—Evolution of Contract Settlement Policy—The Liquidation of World War I Contracts—Development of the Negotiated Settlement—Background and Passage of the Contract Settlement Act—War Department Preparations for Mass Termination
Chapter 28: Termination and Settlement Procedure
General Settlement Procedure—Special Settlement Procedures—No-Cost Settlements—Pre-termination Planning and Agreements—The Consolidated Termination Program—Company-Wide Settlements—Other Subcontract Settlement Procedures—The Settlement of CPFF Contracts
Chapter 29: Contract Settlement in Operation
The Terms of Settlement—Financing of Contractors—Advance Payments—Guaranteed Loans—Partial Payments—The Disposition of Contractor Inventory—Statistics of Contract Termination—Concluding Observations
Part Eight: Epilogue
Historical Recapitulation—Prewar Planning and the Launching of Rearmament—Determination of Requirements—Purchasing Policy—Expansion of Facilities—Production and Material Controls—Contract Termination and Settlement—Concluding Observations
Bibliographical Note and Guide to Footnotes
Tables
1. Budget Expenditures of U.S. Government, 1 July 1940-31 August 1945
2. U.S. War Program For World War II: By Procuring Agency, 1 July 1940-31 August 1945
3. U.S. War Program For World War II: By Major Categories, 1 July 1940-31 August 1945
4. Ordnance Department: Procurement Deliveries of Selected Major Items, 1 July 1940-31 December 1945
5. Quartermaster Corps: Procurement Deliveries of Selected Major Items, 1 July 1940-31 August 1945
6. Signal Corps: Procurement Deliveries of Selected Major Items, 1 January 1940-31 December 1945
7. Medical Department: Procurement Deliveries of Selected Major Items, 1 January 1940-31 December 1945
8. Corps of Engineers: Procurement Deliveries of Selected Major Items, 1 January 1942-31 December 1945
9. Transportation Corps: Procurement Deliveries of Selected Major Items, 1 January 1942-31 December 1945
10. Chemical Warfare Service: Procurement Deliveries of Selected Major Items, 1 January 1940-31 December 1945
11. Army Air Forces: Procurement Deliveries of Airplanes, January 1940-December 1945
12. Number of Manufacturing Facilities Allocated or Reserved, Summary for Specified Years, 1923-1941
13. Distribution of Allocations and Planned Procurement Load: By Army Supply Arms and Services, 1 January 1938
14. Geographical Distribution of Planned Procurement Load, Data as of 18 February 1938
15. First Educational Orders Program, Fiscal Year 1939
16. Strength of Army and National Guard, 1920-1945
17. Munitions Program of 30 June 1940
18. Army Supply Program, Section I: Army Ground Forces Requirements in Successive Editions of ASP
19. Army Supply Program, Section I: Required Production for Calendar Years 1943 and 1944
20. Army Supply Program: Comparative Magnitude of Sections I-IV in Mid-1943
21. Final Estimates of Army Procurement Requirements for World War II
22. Victory Program Troop Basis, Summary of 15 December 1942 Revision
23. Monthly Replacement Factors for Selected Items of Army Equipment at Specified Dates
24. Army Requirements for Major Expendable Items, 1 August 1943
25. Day of Supply of Ammunition for Theaters of Operations at Indicated Dates
26. War Department Procurement: By Purchasing Method, 1937-1940
27. Maximum Fixed Fees for CPFF Construction Projects With Corresponding Percentages of Estimated Cost
28. War Department Supply Contracts Placed in World War II: Relative Use of Fixed Price and CPFF Supply Contracts
29. Army Air Forces and Ordnance CPFF Contracts: Advance Estimate of Costs in Individual Contracts over $10,000,000
30. Unit Costs and Fixed Fees Under CPFF Aircraft Contracts for Individual Contracts Placed at Specified Dates
31. Sales and Profit Margins Under CPFF and Fixed-Price Contracts
32. Ordnance CPFF Heavy Equipment and Supply Contracts: As of 15 April 1943
33. Ordnance CPFF Management Contracts: As of 31 May 1943
34. Costs and Fees for Small Arms Ammunition at Six Ordnance Plants as of 1 March 1943: Cost per Thousand Rounds of Complete Cartridges
35. Operations Under CPFF Contracts for Heavy Ammunition: Cumulative Costs and Fees to 30 September 1944
36. Use of Periodic Pricing Articles: By Ordnance Department, 1 April 1943-1 October 1944
37. Incentive Article Under Army Procurement Regulations
38. Reward for Fair Prices: Hypothetical Renegotiation of Three Firms With Identical Costs
39. Ratio of Net Profits to Sales: Before and After Contractors’ 1942 Renegotiation With Base Period Comparison
40. Disposition of Renegotiation Assignments, 1942-1946
41. War Department Price Adjustment Board Assignments: As of 6 February 1948
42. Renegotiable Sales, Profits and Profit Margins, and Amount Recovered
43. Effect of Renegotiation on Corporations Grouped by Volume of Sales, 1936-1939: 3,178 Refund Cases Renegotiated by All Departments for Fiscal Year 1943
44. Quarterly Index of Contract Price Changes: 1942-1945 for War Department and Component Agencies
45. War Department Prime Contracts and Subcontracts
46. War Department Prime Contract Awards by Size of Firm: Monthly Placement of Supply Contracts in Excess of $10,000 Each, November 1943-December 1943
47. Award of Prime Contracts by Size of Firm—Annual Placement of Supply Contracts in Excess of $10,000 Each: By Major War Department Agencies, 1943-1945
48. War Department Command Facilities: Summary by Major Types
49. War Department Command Facilities: Cost of 50 Largest Installations
50. War Department Certifications For Tax Amortization, 8 October 1940-15 February 1945
51. Cost of DPC Plant Expansions Sponsored by War Department, 1 July 1940-1 October 1945
52. Major DPC Facilities Sponsored by War Department
53. Nucleus of Ordnance Facilities Expansion for World War II: Ordnance Projects Under Construction as of 28 February 1941
54. Industrial Facilities Owned by War Department: Cost of 50 Leading Establishments, 1 July 1940-30 September 1945
55. Estimated Military Procurement Expenditures in 1942 and Percentage Distribution by Rating Class, 26 February 1942
56. Number and Value of AAA Ratings Approved by WPB Special Rating Division: As of 3 February 1945
57. War Department Advance Payments, Status as of 31 August 1945
58. War Department Contractor Inventory Disposals, 1 September 1945-31 December 1946
59. Plant Clearances Effected by the War Department, 1 September 1945-31 December 1946
60. War Department Contract Terminations and Settlements: Cumulative Progress at Specified Dates
61. War Contract Terminations and Value of Canceled Commitment: By Agency and Type of Contract Through 31 March 1947
62. War Department Contract Settlements: By Technical Service, Type of Contract, and Type of Settlement
63. Comparative Use of No-Cost Settlements: By Principal Contracting Agencies
Charts
1. Organization of the Army Service Forces, 15 August 1944
2. Approximate Ratios of Initial and Replacement Requirements to Total Army Requirements, 1942-1945
3. Profit Margins after Renegotiation (before Taxes): Navy Department Fixed-Price Manufacturing and Shipbuilding Contractors, 1942-1945
4. War Department Advance Payments: Advances, Recoupments, and Balance Outstanding, 30 June 1941-30 September 1945
Illustrations
The Honorable Robert P. Patterson—Secretary of War Henry L. Stimson—War Resources Board—Lt. Gen. William S. Knudsen—General Brehon B. Somervell—Army and Navy Munitions Board, 1941—Weekly Staff Conference—Heavily Burdened Soldiers Debarking—The Pentagon, Washington, D. C—Advisory Board on Tax Amortization—Form for Settlement Proposal
All illustrations are from U.S. Department of Defense files with the exception of the one appearing on pages 638-39, which is from the National Archives.