proadening of the market area, with particular emphasis on standardprocurement items including basic construction materials, was achieved, with the result that purchases in this category rose by 50 per cent for the Oakland-San Francisco region. In addition, some changes in personnel were effected. A later investigation of procurement activities requested by H & N shoved that the previous deficiencies had been eliminated, and the findings further stated that current purchasing operations were in compliance with the AEC approved procedure. It has recently been indicated by State of California Officials charged with the responsibility of administering State Seles and Use Tax laws that a substantial claim may be asserted for taxes in connection with the procurement and shipment of approximately four million dollars worth of materials and equipment to the Jobsite. It will be noted that, by the terms of Contract AT-(29-1)-507, title to all materials and equipment and the like passed immediately to the United States Government. Furthermore, at the inception of the Contract the question of Sales Taxes had been raised by H & N representatives in discussions with AEC Fiscal and local representatives. The results of these discussions were inconclusive inasmach as the Contractor was faced with a situation in which most vendors and suppliers were either unable to package materials for export or quoted prohibitive prices for this service. As a consequence it was necessary to contract for the services of an export packing organization. It would have been desirable if the packing services could have been rendered on the Oakland Supply Center premises. However space was not available at that location and as a consequence, export packing was done at the premises of the subcontractor. Opinions differ as to whether this procedure has legal significance in fixing tax liability and at present the matter is under review by all parties concerned. In conclusion, attention should be called to the list of suppliers presented as Exhibit A at the end of this section of the report. This list reflects a cross-section of United States industry - a situation not normally encountered in a construction procurement program. In the procurement activities under this Contract, which involved the expenditure of more than $16,000,000 through the issuance of purchase orders and subcontracts, the entire gamut of materiale was covered in order to permit construction of the base facilities, scientific stations, and military structures, and to sustain life and moraie. 13-24