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BOARD OF GOVERNORS
~ii
OF" THE
FEDERAL RESERVE SYSTEM
R-834
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
May 15, 1941
Dear Sir:
You will recall that on December· 12, 1940 (B-1S5l),
we forwarded you copies of memoranda relating to surety bond
req_uirenients of the Army and Navy on defense contracts. On
May 10, 1941 ( R-831) , \ve :·orwarded you a copy of an act of
April 29, l941 :-ele.ting to waiver by the ~3ecretary of War
and the Secretcn,y o:r· the Navy of .surety bond requirements.
In eorme~tion with the above, there is enclosed
for your ini'orm=:.tion a co~)Y of a memorandum from the Under
Sec.,...t:Jt<-try cf ~~a.r to 'Ii:":e Director of Purchases und Contracts
governing th~~ a,)pl:'..cc:3ion of the [)revisions of the act of
April ::::9, 1941 in so far as the' v;ar Depa.rtment is concerned.
We understand that the Navy DepHrtFIGnt is formulating its
policy under that act and we hoge to be 1:ibh~ to advise you
at an early date as to the policy adopted by tllat Department.
Very truly yours,
Enclosure
TO PIIESIDJ..J:,'TS OF' ALL I<BDE.k.AL .RE.'::)ERVE .d.t;.M\.8
CO.flf TO :BEL>E.Ii.AL h'EdlJ'iVE i.lLF'El'iS:l!: CON'IAAC'I OF':BICJ:J-:8
R-834-a
W.i-'.R DEJ:>Aft'Ud!l~'l·
Oii'f!CE 01 TLE UNDER S:ECflli"l'iilif
Wi-u.S.b.Il'·iG'IOl'i, I'. C.
M.ay 6, 1941
MB.lOE...JiiDUhl for 'i't.e_ I'irector of Purchases and Contracts
S":J:&ECT:
Wai v2.r. unde::" autbori ty or' the .Act of April 29, 194.:1
(Put.iic J·~o. 4.Z., ?"th Congress} of req_ui rcn;ents for
performm:ce and pc.yment bond.s.
1. ThE:; !'ol1cv:int',S ··1ill gover·n the application of the provision::: of the Act of April 29, 19•±1, which reads:
"That the Act of .august 24, 1933 (49 Stut. ?92-), ma:y~ in
the discretion or thE": S8crctury of Wa:..~ or the Secretary
of the Ne.vy, bf• w2ive.d ~-.·itt rrs.x:ct to contructG for the
manufacturin~, producint;, furi:.isl:.iut;, cor.struction, alteratj_on, repai;.~, .[.n:•ocessin<,, or c..ssemblint- of vessels, alrcrlift, mun~ tions~ mz::,terteJ, or· suj?pli >S of tulY kind or nature for the .Army o1· the ~i•J.VY, regardless of the terms of
such contructs 'iS to ;_),,.y.n,,_,t:t or title: P:ovided, thc..t us to
contracts of e. m.~turc whieb, nt the datE: of' the pt:lGS<:J.ge of
tl:ia Act, would. t1• .. ve br.;en sub~~~ct to the provisions of the
Act of t:..ug11.5t ~4, 1935 ( ·B Stat. 793), the Svcrot·.iry of War
or the Secr(;t;:try of the l\l!iVY n1ay require _perforir.~mce !!r.d
paynv~nt bonds o.s prcvid.ed by said. Act."
2.
In
~""ny
ce::se in ·wtich tnc: cbief of tt·f:\ S'U.ppl.f arm or
service .;oncerned considG:::·s tlli_j_t bec.::...~~se of Si-h'Ci::il ci rcumst::a1cc.3
a paym8nt bond should be requi.l:'("'d in connection with c.n;; supply
contract by reason of provisions for r.wrtial l)uyments or otherwise,
he v;ill mc.ke recorr.l!l8ndat:!0!1 t.o th.1t efi\;ct to thG Under Secretd'Y
of War, ':.tccomr~nieci b;;~ a st•::..t·..,mcnt o1' f.J.cts upon whict. the recommbndation is bes3C:~, :i.n order tt.:.>t the Ur:d;;;r Secret·~ry of· Wb.r mu.y deterinine
whetht·lr st1cn b.:md r~bould be I't::'·lt,i:':'E.-d. \l'it.ere a P~•.Y""lllf;nt bond ia NJquired, the contrdct vdll so state.
3. T~:€' Secret~~ry of' War· h:1s determined, except as provided in pa.ra.gru.ph 2 above, tht;.t uo pt:ty;ment bond slH.ill be re4_uired
in connection with any supply contr~j_ct ( t.e., contr~.cts for the
manufacturing, producing, furnishing, construction, alteration, repair, processing, or asser!.b1J.ng of vessels, aircrttft, munitions,
mat(~rid, or supplies of any kind or nF..ture for the J'.:rm;,d.
>
R-834--a
4. The Secretc:1ry of Wur has determined, with respect to
performance bonJs in connection with any supply contract (i.e.,
contrr1cts for the fll(:.tnufcwturing, produ:::ing, furnishing, construction, ulterution, repair, _processing, or assembling of vessels,
aircraft, munitions, mutel·iel, or suppliE'S of :my kind or nature
for the Army), th::>t no such bond shall in the future be required
by virtue solely of' the provlsions of" the Act of August 24, 19~·5
(49 Stat. 793) or Parc.gruph 10 ~ (2), Army Regul'itions 5-220, but
.Parn.graph 10 ~ ( l}, Anry Hegulations 5-220 ::,nd other pertinent
Army He§;ula tions u.nd instructions of the Secretury of War rel~1ting
to pcrfonr,unce bonds on supply contracts wi.lich ar.:l not also contracts fo::' "public work of the United States" shall equally :1-pply
to supply contracts ~1ich are cluss8d as contracts for "public
work".
By direction of the Secretary of War:
( Signed ) RO l:lEHT
.e.
J?A'ITERSOJ',
Under Secrc:ltary of ¥n.:.r
-2-
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