upr000149 194

Loe Angeles, Hay 20, 1948 (0C - Mr. V. R. Bracken Mr. Leo A. MoNaaee) Mr. Frank strongI Referring to Mr. Bracken*s letter of May 24th, hie file V 23-1 and W 23-1-28 in connection 10% to ooat of water mains installed under R uvliet h9 a-Adtding X discussed this matter with Mr. MoMamee and , Mr. Bracken while in Lae Vegas recently with eapeeial reference to the inclusion by Mr. MoHamee of this 10> item in recent contracts. Mr. McNaaee advised me that it had always been his understanding that such a percentage had been includ­ed in the estimated cost set forth in earlier contracts but that in writing the later contracts, he felt that such an item should be specifically included in the contract itself. As you know, it has been the practice of, not only this railroad company, but also other companies in making contracts for construction work, to include therein a percentage for offlee expenses, supervisors, overhead or whatever the term might be, and no question has ever been raised with respect to the propriety of such an item. Ae a matter of fact* in every oontraot of that nature, there are certain services performed, the cost of vihieh cannot be readily determined and it has been a common practice to cover such eoste in an omnibus percentage addition to the oost of the Job. Such a per­centage figure is normally inoluded in the oontraot fig­ure. uith respect to any reaction by the Public Ser­vice Commission in Nevada, X think we should cross that bridge when we come to it. Personally, X think the Com­mission will recognise the propriety of the inclusion of such a sung in the estimated cost of any work done under Rule 9-A, irrespective of the fast that possibly that practise has not always been followed in the past. Xf there are any written commitments outstand­ing with any property owners or sub-dividers which would