Inspection and Materials Testing and indirect items such as Progress Reports, Clerical, Blueprinting, etc. The H & N Controller was later advised that the information supplied by means of the report required by Controller's Release No. 9 was a mandatory requirement of the Bureau of the Budget, which had proved reluctant to approve various revisions proposed by AEC. At the February 17 - March 2 meetings, approval of the proposed me- thod of allocating indirect expense to Jobs in Progress was secured, with one exception. H & WN was advised by the representative of the AEC's Washington Controller that new instructions to be reflected by revised AEC Controller's Release No. 9 classified salaries of the Personnel and Procurement Departments as "Administrative," to be distributed to cost through indirect expense, rather than following direct labor and direct materials cost in accordance with the H & N proposal, based on the original estimate. The H & N Controller expressed extreme reluctance to con- tinue deviating from the basis of the original estimate, inasmuch as this practice compromised internal control of job costs and created an untenable position in the event that, as a result of being combined with other estimate items, an estimate item over-ran the estimated cost. The Controller was then informed that it was not mandatory that the change be effected immediately and that the matter would be discussed further after official issuance of the revised CR-9. It was conceded that if the change became mandatory, it would probably be desirable to indicate by footnote a reconciliation between H & N proposed Cost Statements and the CR-9 Report. During these meetings instructions were issued, effective March 1, 1950, requiring all integrated contractors to reflect equipment depre- ciation. The Controller suggested that because of the climatic conditions prevailing at the overseas project, normal Stateside depreciation rates would prove inadequate. This was readily recognized, and it was recommended that depreciation be computed on the basis of the anticipated life of the equipment, or the anticipated length of the construction contract, whichever was the shorter. Subsequent authorization was obtained to de- preciate new equipment on a 4-year basis and used equipment on a 2-year basis, with provisions for necessary adjustments at the end of the construction phase by surveying off equipment no longer usable, or repairable, on an economtc basis. Authorization was also given to reflect de- preciation on construction equipment in the "Equipment Usage" column of the "Cost Report - Jobs in Progress", in conformance with the original estimate. Approval was also granted to reflect depreciation on marine or automotive equipment in indirect costs for proration to the Jobs in Progress, in accordance with the approved formula. Information was furnished by the AEC Contract Administrator to the effect that revision of Appendix "D" of the Contract to conform to the original estimate was in progress. During the Los Alamos conferences of January 19, 20, and 21, 1950, it had been specifically agreed that the Construction Battalion would be 11-17