equipment were physically inventoried and properly stored in an orderly manner; at that time, accountability controls and stock records reflected @ variance of approximately $2,000.00 or .0122 per cent of the approxi- mate total charges ($16,400,000.00) to the Inventory in Transit Account. Considerable difficulty was encountered in establishing costs of equipment and materials delivered into H & N custody at Jobsite by the military agencies, for which they reimbursed themselves from working funds advanced to them by the Commission. In accordance with agreements between the Commission and the respective military agencies involved in these transactions, charges against the AEC advanced working funds were to be covered by properly documented billings furnished AEC on a current basis, The charges were in turn to be transferred to H & N by the Commission by means of Inter-Office Transfers. (See sample form presented ag an exhibit at the end of this section.) Non-conformance to this procedure on the part of the military was consistent throughout the Construction and Test phases of the Project. Inter-Office Transfer billings covering these transactions seldom if ever were furnished H & N in less than 90 days; and in some instances, billings of items transferred at costs well in excess of $100,000.00 were not received by EH & N until more than a year after delivery. ‘Thus H& N was unable to apply exact costs to Materials and Equipment Record Cards and was compelled to process Stores Issues indicating quantities used only and reflecting no unit price, or dollar value. Much later, upon receipt of the priced Inter-Office Transfers, it was necessary to complete a voluminous quantity of such unpriced Stores Issues and to prepare cost distribution journals many months after consumption, or use, of the items involved. H & N was repeatedly advised by AEC that every effort was being made to secure the necessary documentation from the military agencies to make possible transfer of these costs to H & N. Inasmuch as AEC was never successful in resolving the aituation, it was ultimately mtually agreed that all items received from these military sources would be set up on H & N accountability records at estimated prices, based on the | most recent military billings available on identical items; and that they would be costed out on this basis at time of issuance from stock. Any variances resulting from the use of estimated prices were costed into a vartance account for subsequent proration to the cost features of the work, Agreements were reached during Los Alames Meetings of January 19, 1950, whereby all other participating agencies (excluding AEC) were to designate Property Accountable Agents and station them at the Jobsite to receive and maintain custody and accountability records in connection with items acquired by or for these other agencies. This would relieve Holmes & Narver of any responsibility or accountability for items not delivered into H & N custody. These agreements conformed to prior agree- ments at Washington levels, as confirmed by “Secret” letters from General Gerhart, acting on behalf of “The Chairman, Joint Technical Planning Committee," addressed to "The Chief of Naval Operations. (Op-40)," and 11-24