Title: War Economy

Author: Baker, J. V. T.

Publication details: Historical Publications Branch, 1965, Wellington

Part of: The Official History of New Zealand in the Second World War 1939–1945

This text is the subject of: ‘Something of Them Is Here Recorded’: Official History in New Zealand

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Slackening of Pressure Gives More Time to Check Contracts

The unprecedented volume of war contract work combined with shortages of departmental staff due to military recruitments often made adequate forward estimates of quantities and costs impossible. It was the absence of these estimates which led to most of the abuses of wartime contracts. In many cases abuses continued unchecked, because there was inadequate supervising and checking staff to watch progress of work and to examine claims. It was not until the rush of work started to taper off in 1944–45 that there was sufficient breathing space to make really adequate checks on contractors’ quantities and costs. By then much of the evidence needed for proper checking had gone.

Abuses of wartime contracts were by no means universal, but they were nevertheless widespread.

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In building and construction work investigation revealed considerable overpayment as a result of contractors entering wrong quantities in the master schedule.¹ One remeasurement resulted in a payment of £228,000 being reduced to £197,000, a difference of £31,000.

As a result of investigations an offer was made by five contractors, in August 1945, to refund £5561, while in December of the same year the Public Works Department advised another five contractors that defence construction contracts they had carried out had been remeasured and refunds of overpayments were sought ranging from £2800 to £17,000.

In other cases evidence was found of timber being moved from job to job and the records becoming muddled.

These discrepancies were coming to light at the stage where the volume of defence construction work was falling and the Public Works Department was able to catch up on its work of checking defence contracts. Defence construction work, after costing over £17,000,000 in 1942–43, and over £13,000,000 in 1943–44, fell to just over £5,000,000 in 1944–45.

Checking back on contracts let during the rush period was becoming increasingly possible and a number of other refunds were made by contractors, some of large and some of small amounts. However, reviews of contracts and discovery of abuses, at this stage, did not always lead to refunds. Entry of excessive quantities on claims, though often suspected, was, with the passing of time, becoming more difficult to prove, while evidence of profits far in excess of those contemplated when contracts were drawn did not always give grounds for legal action. Nevertheless other countries succeeded in reviewing war contracts and an attempt was made in New Zealand. Success here was very limited.²