Assignment Of Claims Act
Oct. 9, 1940, "to assist in the national defense program by amending Sections
3477 and 3737 of the Revised Statutes to permit the assignment of claims
under public contracts" (P.L. 811,76th Congress).
Such assignment of claims allowed manufacturers to assign the contracts
as security for borrowings from banks needed for defense plant construction.
a new form of uniform bankable contract was developed by the NATIONAL
DEFENSE ADVISORY COMMISSION after consultation with the War and Navy departments
and the Comptroller General. This
contract had two purposes: to
expedite signing of supplies contracts by the Army and Navy by assuring
the contractor against loss on construction undertaken for military purposes
and to safeguard the government's interest in such facilities on termination
or completion of the contract.
contract provided that the government reimburse the contractor not in
additions to the unit price, as previously, but in five equal annual installments
covering the amount of his capital expansion costs.
Thus, cost of supplies and amortization of construction cost would
be kept separate. Prices
were held at a minimum, and while the manufacturer was relieved of the
risk involved in building fixed assets for the emergency, he still absorbed
the risks involved in production.
The contract also contained provisions whereby the contractor might
by purchase or lease from the government acquire use of the facilities
for himself after they had served their emergency needs.