79



The letter from Vice Admiral Hussey indicaites that the pro-
posed project is experimental and development work in the
*ficld of physics, especially in regard to magnetic and
electrical experiments and tests, The University will
agroe to supply the necessary facilities, personnel and
materials -and to use its best efforts in conducting the
wmork.  The University is to keep complete records of the
costs and expenses and to submit nn invoice monthly and
a report of the progress of the work as required.   The
University agrees to grant to the government a non-exclusive
royalty free license to use patents resulting from the
work fand to so provide in contracts with employees working
on the project.   Employees are to be paid time and a half
for all work in excess of eight hours per day.

This is apparently Intended to be a no fee contracts   The
government, however, agrees to pay all c6sts of the work.
The various items and expenses to be included as costs are
stated in Article 5 of the contract and explained in more
detail in the attached booklets   They include:

(1) The net costs of all supplies, materials and equipment
purchased directly for the performance of the contract or
otherwise furnished by the University for this purpose.

(2) Direct labor cost which includes salaries and wages of
scientists, technicians, draftsmen, and workmen directly
employed in the performance of the contract.    In case of
part time work, a proper part of the wages or salary should
be charged against the project.

(3) Indirect labor costs which includes a ratable part of
the wages or salary of administrators, store room clerks, ac-
countants and others listed in Sections 16, 21 and 39 of
the booklet who are furnishing services in connection with
the project but who are not directly working on it.

(4) Laboratory or shop costs which includes the cost of
rearrangement, heat, light, Janitor service, rentals, prop-
erty insurance, depreciation of equllpment, and other items
properly to overhead or the proper ratabl.e part of such
costs*

Costs, other than those stated above, are provided for in
the contract which seems to be very liberal in this respect
and which, in my opinion, will protect the University against
any loss or expense in conducting this work.    It is apparent-
ly the intention that many of these Items, especially the ad-
ministrative, indirect labor and overhead cost, are to be
agreed on in advance and stated in Schedule A.