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Washington, September 15, 1915.
To: The Secretary of the Navy.
Subject: Paymaster General's Annual Report.

The Navy being afloat and the shore establishment being of use only in so far as it contributes to fleet efficiency, the ideal way in which to conduct the activities of any strictly service bureau would seem to be to follow as closely as possible the administrative methods of the fleet.

With this in view there have been inaugurated intrabureau orders corresponding in a general way to fleet regulations, and section orders intended to parallel those of a ship.

By such orders it has been practicable to make known and keep a record of policy and procedure, with the result that prompt and concerted action is secured and the same type of question need ordinarily be considered but once. Among the first such orders was:

That the bureau's files may be complete and dependable, all correspondence on official subjects will hereafter be conducted in official form and through official channels.

This is not to be so construed as to unduly circumscribe corre spondence or to discourage suggestions from officers and others outside of the bureau.

On the contrary, suggestions and constructive criticism are always appreciated and often helpful and in any event deserving of encouragement.

When necessary to use the telephone—especially long-distance the person calling (or answering, as the case may be) will invariably have a written memorandum prepared for the official file immediately after the talk, this memorandum to contain a brief outline of the substance of the conversation. Such memorandum will be shown to the Paymaster General or the Assistant to the Bureau without delay in case the subject matter discussed is of

importance. Other intrabureau orders issued about the same time required that the place be cleaned up and kept clean, that the number of form letters be increased to avoid unnecessary typewriting, that all communications be less stereotyped and more polite, that all guest chairs and other useless furnishings (especially rugs and roll-top desks) be removed, that outsiders be excluded from rooms in which the clerks work, that official letters be encouraged and personal interviews discouraged, that desks be cleaned and standardized inside and out, that smoking in the hallways be stopped, that bids be handled with punctilious care between the time of their receipt and the hour for opening and that official information be furnished only by those in authority.

Correspondence received special attention in several intrabureau orders, from one of which is quoted:

Don't write at all unless you have something to say; and, having said it, stop.

Don't answer a letter just because somebody else wants you to. If you did, many a purposeless correspondence might go on indefinitely.

Don't hesitate to say “no” if that is the proper answer; and, having said it, don't attempt to suggest an alternative aimed to circumvent your own “no."

Don't discuss people; discuss things.

Don't write anything that has the least semblance of inflicting a punishment or of encroaching in any way on the proper prerogatives of any other bureau or office. The legitimate function of this particular bureau is to supply the fleet and to account therefor; and any attempt at aggressive expansion must of necessity have the effect of crippling our work and to that extent weakening the Navy, it being a fact beyond dispute that if we mind our own

business there is plenty of it to take up all our time. The purchase section forms so important a part of the Navy's supply system that its proper procedure has been outlined in a number of orders. One, dated October 12, 1914, was this:

Go slow on waiving competition, even in cases where it is permissible. No matter how lenient the law or regulations in the case may be, get competition always unless manifestly contrary to the Government's best interests. Err, if at all, on the side of public competition (with emphasis on both words).

Stand by the lowest bidder whenever possible. Having practically a vested right to the award until it is affirmatively established that his bid is defective in some essential respect, he is entitled to just a little more consideration than anybody else; or, rather, to full and fair consideration before anybody else. is therefore entirely inappropriate to compare his offerings on an equality with his bigher-priced competitors for the purpose of deciding which is preferable, the only question to be decided being as to whether his offering is satisfactory (in which event all others are automatically rejected). After the lowest bidder has been disqualified for valid reasons, then the bidder next above him takes his place and succeeds to all his original advantage of position. And so on until, possibly, the highest bidder may eventually become the lowest acceptable bidder. But the process needs to go step by step through each intervening bidder (and it will not often occur).

In all these dealings it is to be borne in mind that bidders' rights are not necessarily in conflict with the Government's interests. On the contrary, it is the best public policy imaginable to accord to every business man the maximum of consideration; provided, of course, the interests of the United States are carefully and constantly safeguarded.

It is scarcely necessary to add that contractual rights carry with them contractual obligations on both sides; and one of these obligations resting upon the Government and all its servants (including us) is to help every contractor to make good if he can, no matter who he is or what he has undertaken to furnish; because, once he gets a contract, he ceases to be a competitor (to be critically compared with other aspirants for that particular order) but becomes to all intents and purposes a fellow servant of and co-worker for the Government, so long as his good faith and well-directed work

hold out. Exactly how to secure the widest competition and at the same time get supplies promptly is a question very hard to answer.

The British maintain an admiralty list, to which are admitted only such firms as are known to be wholly dependable—the King's Regulations containing the laconic statement that “the objections to middlemen are obvious."

But the British system, desirable as it is from a strictly military standpoint, would not work here under ordinary conditions because it does not fit American ideas. And yet, while the freest possible competition among all intending bidders is much to be desired. there

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