bursing officer after payment has been made, and will have indicated thereon the same information as to the check issued in payment as is placed on the original. No letter of transmittal is necessary for the copy forwarded to this bureau.

16-95. Possible damages for delay as affecting amount of reservation. Whenever completion of a contract shall have been delayed to such an extent that the 10 per cent reservation may be less than the amount of liquidated damages at the rate provided, or when such reservation may be less than any other credits due the Government, partial payments shall be withheld or so restricted that the balance due on the contract will be unquestionably sufficient to cover all the liquidated damages or credits which may accrue to the Government. "No money shall be paid to any person for his compensation who is in arrears to the United States until he has accounted for and paid into the Treasury all sums for which he may be liable. (Sec. 1766, R. S., and arts. 1802 and 1803.)" (N. R. 1744-1.) It shall be the duty of the officer in charge to protect the interests of the Government in this respect, and unless specific report is made to the contrary, the bureau will assume that the 10 per cent reservation provided by the contract is sufficient to cover any and all credits due the Government.

CHANGES AND EXTRA WORK.

16-96. "Change orders" and "supplemental agreements." Changes, when made in work under a contract, are covered either by change orders or by supplemental agreements, the former applying, usually, to changes involving minor details or relatively small amounts of work. No fixed line of demarcation, however, can be laid down to govern the employment of the one means or the other in every case.

16-97. Bureau authority required for extra work or changes increasing cost. The officer in charge shall not authorize extra work or changes which increase the cost under any contract without the prior approval of the bureau. An exception to the foregoing is allowed in the case of stations beyond the continental limits of the United States, where, in an emergency, the officer in charge may authorize the contractor to make changes not to exceed $500 in cost; provided, however, that the unobligated balance of the funds allotted by the bureau for the work at hand is sufficient to cover any increase so authorized; when such action is taken, immediate report, containing data for issuance of formal change order, shall, in all cases,

be made to the bureau. The officer in charge may, however, authorize minor alterations or changes where the necessity therefor arises in the course of the work and where immediate decision must be made, provided the contract cost is not increased thereby.

16-98. Action by officer in charge in initiating changes. When the interests of the Government require changes in the contract plans or specifications or extra work to be performed, the officer in charge or the project manager concerned shall initiate the necessary action toward securing appropriate modification of the contract. When the officer in charge deems additive changes or extra work necessary, or where he has authorized changes decreasing the contract cost, he shall submit at once to the bureau a report of the situation, outlining all pertinent details and making necessary recommendation in the premises; invariably this report should state the estimated cost of the work involved and whether or not an additional allotment of funds will be necessary. When immediate decision must be had in such matters, the officer in charge should communicate with the bureau by telegraph or, if practicable, by telephone, to secure the requisite authorization. When the additional cost of any change, as estimated by the officer in charge, is less than $500, the report should contain all information necessary for the issuance of a formal "change order" by the bureau; that is, it should contain (a) the estimate of cost by the officer in charge; (b) the estimate submitted by contractor, or, in lieu thereof, a statement that the estimate of the officer in charge is agreeable to the contractor; (c) the extension of time, if any, recommended by the officer in charge; (d) the extension of time requested by the contractor; and (e) the recommended wording of the change order. If the urgency of the situation or other cause precludes the submission of complete data for a change order, the officer in charge shall so state in his report. When the estimate by the officer in charge exceeds $500, the cost must be determined by a board, after approval of the change by the chief of bureau, in accordance with the general provisions.

16-99. Action where major changes involve cessation of work. Where a change of major character, involving cessation of the work, is initiated by the Government, care shall be taken to have the contractor discharge all idle employees except those required for care of property and those working on long-term contracts. When the Government is known to be unquestionably responsible for the

change and chargeable with the cost thereof, the officer in charge shall, if practicable, utilize in Government work those employees who can not be discharged, since their pay, under the circumstances indicated, is an item of direct expense chargeable to the cost of the change.

16-100. When changes are initiated at the bureau, the project manager will prepare the data necessary for the issuance of a formal change order or supplemental agreement. Approval by the chief or acting chief of bureau is necessary.

16-101. Action by bureau in approving changes. When recommended changes or extra work are approved by the chief of bureau, such approval is indicated either by a change order addressed to the contractor and containing necessary instructions and a description of the work involved, or by a letter of approval addressed to the station, authorizing the officer in charge to issue appropriate instructions to the contractor and directing that the cost of the work be determined in accordance with the general provisions. In the latter case, a copy of the instructions of the officer in charge to the contractor shall be forwarded without delay to the bureau for its information; and after the cost has been determined, a formal change order may be issued or a supplemental agreement entered into. In either case, an allotment is made for the estimated additional cost, if any; or, if the change involves a decrease in cost, the necessary credit allotment is made.

16-102. Determination of costs; personnel of boards. Upon the bureau's authorization of changes estimated by the officer in charge to exceed $500, the commandant shall designate a board to ascertain and report the cost of the same. Such cost shall be determined in strict accordance with the general provisions. Civilian employees, provided they possess the necessary competency, may be ordered to serve on such boards, although at least one officer of the Corps of Civil Engineers should be included whenever possible. When any civilian is designated for such board duty, his pay-roll designation or title should be indicated in the precept. Particular attention is directed to the requirement of the general provisions that "the increased cost shall be the estimated actual cost to the contractor at the time of such estimate, and the decreased cost shall be the actual or market value at the time the contract was made, both plus a profit of 10 per cent." Changes approved by the bureau under this requirement are not to be construed as authority to require or permit the contractor to

perform additional work under a "cost plus 10 per cent" arrangement. The cost in such cases shall be the estimate of the board (or of the officer in charge in changes of less than $500), arrived at after conferring with the contractor and hearing such statements as he desires to submit. Whenever practicable, the estimate should be made before the work is undertaken, and in any event as soon thereafter as circumstances permit.

16-103. Items of cost which may be included in estimate. In addition to the direct labor and material involved in a change, there are other elements whose inclusion as items of cost depends upon the conditions applicable to the change and hence becomes a matter of judgment for the consideration of the board and of the reviewing and accounting officers. As a basic principle, the additional cost or saving involved in a change should be the estimated actual increased or decreased cost to the contractor as a result of such change (as prescribed in the preceding paragraph), and the application of this basic principle to items will assist the board in arriving at its conclusions and recommendations. Another basic consideration is the responsibility for the change; in cases where changes are made for the convenience of the contractor, it is quite proper to disallow certain items of general expense which would be allowable were the change made at the instance of the Government. There are set forth below certain items to be considered in determining compensation for changes; under such of these items as can, in the judgment of the board, be allowed, an attempt should be made to estimate the change in expense to the contractor by reason of the change in work.

(1) Estimated direct labor and material for both temporary and permanent construction, exclusive of plant; proper allowance should, however, be made for the salvage value of temporary work.

(2) Rental of plant.-"Plant" is defined as large equipment or devices ordinarily moved from place to place, and available upon completion of the work for use at other points. Typical examples are: Derricks, engines, boilers, compressors, concrete mixers, pumps, hoists, power-driven tools, motors, cars, pile drivers. Where the plant used on an additive change in the work would not otherwise have been required, or where it would otherwise have been idle and available for employment elsewhere, due consideration shall be taken of the added cost entailed upon the contractor by its use. Where, however, the cost of the plant to the contractor is not modi

fied by reason of the contract change under consideration, plant rental shall not be included as an item of cost. When the plant involved is owned by the contractor, the following items of expense may properly be considered: Average annual depreciation charge, based on the expected economical life of the equipment; shop repairs; field repairs; storage and incidentals; insurance; and taxes (except Federal taxes). Where repairs offset depreciation both should not be included as cost. No allowance should be made for interest on the investment, since a profit of 10 per cent is applied in all cases. If the foregoing items are expressed on a yearly basis as a percentage of the total original cost of the equipment, their summation will show the annual cost as a percentage of the total cost, and rental values per month or other period can readily be determined. The allowable monthly rental, for instance, should be determined by dividing the annual cost by 12. By the utilization of equipment on additive changes, the ratio of idle time to working time is accordingly decreased, and it is therefore not proper in such cases that the cost of changes should bear a rental rate which is augmented to cover the idle time of the equipment. Where the plant is rented, the proper allowance is the price which the contractor actually pays, provided it is a fair rental as determined by the value of the equipment. In such case, however, the board must satisfy itself as to the necessity for the use of rented equipment, especially when there is also on the work similar equipment owned by the contractor. For general information with respect to the expected economical life of various types of equipment, reference may be had to Gillette's "Handbook of Construction Cost," 1922, page 133, or to page 1289 of volume 85 of Engineering News-Record, November 30, 1920the data in both cases having been originally prepared by the Associated General Contractors. In citing the above sources of information, however, it is not the bureau's intention to exclude consideration of other sources, or the judgment, based on experience, of members of boards.

(3) Contractor's field overhead, including pay of resident engineers, superintendents, timekeepers, clerks, watchmen, and other employees of the contractor's field office at the site, prorated according to the magnitude of the work involved in the change. Care shall be taken that ordinary field overhead expense be not made a direct charge under productive labor in cases where this field overhead expense is necessary for the conduct of the contractor's business on