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BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-943
WASHINC3TCN
ADDRESS DF"F"ICIAL CDAAESPDNDENCE
TD THE SDAAD
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January l, 1942
Dear Sir:
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There is ~mcJ.osed for your information a copy
of E::ec'J.t.ive Ordar No. 9001 issued by the President of
the 'C"nited States on December 27, 1941, authorizing the
•,rvar and Navy Departments and the United States Maritime
Corr..'lliesio::l to perform the functions and exercise the
powers described in Title II of the Act of December 18,
1941, pertaining to Goverrunent contrac-t,s. This Executive Order is printed at page 6787 of the Federal Register for Tu.csdey, December 30, 19LJ., and is called to
your attention because of the information it contains
with respect to the manner in which defense contracts
:nay be handled. The Executive OrdGr was not received
soon enough to be inch::.ded b the January 1942 Bulletin
but we oxpect to print it in tho February issue for the
info:::·mation of mGmbor banks •
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J<~nclosuro
TO TI-lE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
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R-94:3-a
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E.XECUTIV'1~ ORDER NO. 0001
AUTHORIZING THE VIAR DEPli.RT!!J'lENT, THE NAVY DEPlill.Trftlli~T, Al.'l"D TH.E UNITED
STATES J\iARITII'ilE CONifv1lSSION TO PBH.FOH.!vi THE FUNCTIONS AND E."'XERCISE THE
POW'i'..RS DESC.ct.IBED IN TITLE II OF P.N ACT APPROVED DECEi.IDER 18, l91tl•
ENTITLED "AN ACT TO EXPEDITE THE PROSECUTION OF 'l'HE WAR EYfORT",
AHD PRESCRIBING .REGULATIONS FOR 'l'HE EXERCISE OF SUCH FUNCTIO!'~S
AND POWERS
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The successful prosec1.1tion of the war requirGS an all-out industrial mot·ilization of the United States in order thd. the ma-Leria.lp
necessary to win the war may be produced in the short~1st possible tirne.
To accomplish this objective it is necessary that ·::.he DelJartme;lts of ~iar
:.md th~~ Navy a.11d the United States Mari tih1e Cmmnission cooperate ",;.o the
fullest po::;sible degree with the Office of Production Management in the
endeavor t.(J make avnilable for the pr:Jduction of war m&.terial all the
indu;:;trial resou;.·ceiJ of tL.e Country. It is· expected that in the exercise of the powers hereinafter granted, ·these Af;encies a!'.ci +,he C;ffice of .
Production Management will work togeth~r to bring c.bout the conve!~sion
of :mmuractu::-ing i!:tdustries to war production, incl4ding th0 surveyi.'lg
cf the war pot~ntial of industriss, plant tlf plant; tho spreading of war
orders; the conversion of facilities; the a;:;sura.'1ce of cfficicmj; and
speee.;y production; the development and use of 3ubcontra.::ting to the ±Ullest extent and the conservation of strategic materials •
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TITLE I
l. fr.f virtue of the authority in me vested l.rJ the Act of Congress, entitled "An Act to expedite the prosecution of the War effort",
approved December 18, 1941, (he:::-einafter called "the Act") and as President of the United States and Commander-In-Chief of the ArrrrJ and Na~r of
the United States, and deeming tha.t such action will facilitate the prosecution of the war, I do heret~;- order that the Tiar Department, the Navy
Department, and the United States Maritime Commission be and they hereby
respectively are aut{lorized within the limits of the amounts appropriated
therefor to enter into contracts and into o.,aendments or modifications of
contracts heretofore or hereafter made'~ ami to maka advance, progress,
and other payments thereon, without regard to the provisions of h~w relating to the making, performance, amcmdment, or modification of contracts.
The authorit".f herein conferred mey be exercised by -the Secret~.ry of Wru"',
the Secretary of the Nav.f, or the United States Nl~ri time Conmdssion respectively o:r· in their discretion m1d br tneir direction respectively may
also be exercised t:b.rough a.n;y other officer or officers or civilian officials of the War or the NaV'J Departments or the Uni t.ed States M::..ri time
Commission. Tha Secretary of War, ti·!e Sec:r:etary of the navy, or the
United States Maritime Co:mr;1ission ney confer upon any officer or officers
of their respective departments, or civilian officials thereo.f, tb;: power
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-2to make further d.elep,ations of such powors within the War and ti1e Havy
DcpartrnGnts, and the United States l•.~aritirne Commission.
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2. The contracts hereby authorized to be made include agr08ments of all kinds (whether in tl1e form of lett<::rs of intent, purchase
orders, or otherwise) for all types and kinds of thingr; and sr~rvices
nC;cessary, appropriate or convenient for the prosecution of war, o:c for
the invention, dovelopmont, or production of, or research concf~rning a·.w
such things, including but not limit0d to, aircraft, ·buildings, vass;;;1s,
arms, armament, equipment, or supplies of any kind, ol' any portion therea±', including plans, spar3 parts and equipment therofor, natsrials, D1J.pplias, facilities, utilities, machinery, machine tools, and c.ny other
equipment, without any restriction of an_y kind, either as to type, character, location or form.
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The War Department, the Navy Depa!'tmant) and the United
States Maritime Commission ma;r by agreement modify or ame~1d or Gettle
clai;'Js 1mder con tracts heretofo1·e or hereafter made, may make advar.ce,
pr·ogress, and other payments upor; such contracts of a:1;y· p.srcentum of the
contract price, and may enter into agreements with contractors an:i/or obligors, modifying or releasing accrued obligations of any surt, includi.ng
accrued liquidated dam3.ges or liability under st<rety or oth·c:r bonds, when'-~vor, in the judgment of the Vfa:r D,Jpartmunt, tho Navy Departr:-tont, or the
United States f•ilaritime Commission respectively tl:F:; prosecution of the vm.r
is thereby facilitated. A:nandrnents and )nodifications of contracts way be
with or without considern.ti::m m1d Jae:y be utilized to c..ccomplish the same
things as any original contract cou.ld have acc01.1plished hereunder, irrespective of the tiwe or circumstances of thr~ makin,:'; of or the form of the
contract amended or modified, or of: the maenciing or modifying contract,
and irrespective of rights which Da,y havo accrued under the contract 1 or
the amendments or modifications thereof.
4-· Advertising, competitive bidding, and bid, payment, perforii1ance or other bonds or other forms of security, need not be required •
TITLE II
Pursuant to Title II of the Act and for the p:i."otcction of the
interests of the United States, I do hernb'J prescribe th-s; following regulations for the exercise of tha authority herein conforrod upon the \liar
Departuent, the Navy Depa:rtnwnt, and the United States :Vlaritimo CorY'~:nis
sion.
l. All contracts and all purchases made pursuant to the Act and
this Executive Order sl1all be reported to the President of the United
States. Such reports shall be uade at least quarter--annually, provided,
iloweve:c, that purchases or contracts of less t 1.1~n ;~J.OO, 000 wa;r be com~ol
idated in such reports with ot~B:r Guch purchases a11d need not be separately
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R-943-a
set forth. In case tl·1e War Department, tho NaV'J Department, or the
United States Maritime Commission shal.l deem any purchase or contract
to be restricted, confidential, or secret in its nature qy reason of
its subject matter, or for other re.asons affecting the public inter(::st,
such purchases or contracts shall not be included with those described
in the report just mentioned, but shall be included in a Sf:parate report containing such restricted, confidential, or secr·;;:t purchaSE'JS or
contracts. The Secretary of War, the Secretary of the Hav<.r, and the
United States Maritime Commission shall make public so reuch of such
reports (other than tho3e reports cover:tng 1·estricted, confidential,
or secret contracts or purchases) as they shall res~Jectively deem to
be compatible with the public interest.
2. Notwithstanding anything in the Act or this Executive
Order the War Department, the NaV'J Department, and the United States
Maritime Commission shall not discriminate in any act performed thereunder against any p;:;:rson on the ground of' race~ creod, color or national origin, and all contracts shall be deemed to incorporate b.r
reference a provision that the contractor and any subcontractors thereunder shall not so discrim~tate.
3. Ho claim against the United States arising under any purchase or contract made under the author~.ty of the Act shall be assigned
except in accordance with the Assignment of Claims Act, 1940 (Public No.
811, 76th Congress, approved October 9, =1.940) •
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Advance payments shall be made hereunder only after care-
ful scrutin;;r to determine that such paymentG will promote the national
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interest and. under such regulations to that end as the Secretary of War,
the Secretary of the Navy, or the United States Haritime Comr.d.ssion may
prescribe.
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5. Every contract entered into pursuant to this order shall
contain a warranty by the contractor in substantially the following
terms:
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The contractor warrants that he has not employed an~r person to solicit or secure this contract upon rillY agreement for
a commission, percentage, brokerage, or contingent fee. Breach
of this warranty she.ll give the Governinent the right to annul
the contract, or, in its discretion, to deduct from the contract price or consideration th.;:: rullount of such commission,
percentage, brokerage, or contingent fees. This warranty shall
not apply to comrnissions payable b,v contractors upon contracts
or sales secured or made through bona fide established commercial or selling agencies m~intained by th8 contractor for the
pt<rpose of securing business.
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6.
Hothing herein st1all be construed to authorize the costplliS-a-percentage-of-cost system of contracting.
7. Nothing herein shall be construed to authorize any contracts in violation of existing law relating to limitation of profits,
o::. the payment of a fee in excl:iJSS of such limitation aa may be specifically sot forth in the act appropriating the i'unds obligated u; a. contract. In the absence of such limitation, the fix0d fee to bG pt:.id
the Contractor as a result of an~y- cost-plus-a-fixed-fee contract enter,_;d into under the authority of this Order shall not ex~eed seven per
centum of th.,-:; estimati.:d cost of the contract (exclusive of t~~e f8e as
d:;te~mined by the Secretary· of i'Jar, the Secretary of the Na.v;,r, or the
United States IliarHime Commission, as the case ;nay be).
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8. Ho contract or modification or amendment thereof shall be
exempt from the provisions of the Walsh-Healey Act (49 Sto.t. 2036) because of being entered into without advertising or competitive bidding,
and the provisions of such e.ot, the Davis-Bacon Act, as amGnded (49
Stat. lOll), the Copeland Act, as a..rnended (48 8-t:.at. 9!,.8), a.nd the Eight
Hour Law, as amended by the Act of' September 9, 1940 (Public No. 781,
76th Congress) if othorwisv applicai.Jle r;ht.:.ll appJ.y to contracts made
and performed undC:lr th':J autho1·i ty of this Order.
FRANKLIN D. ROOSEVELT
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The White House,
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@FedFRASER