H.—24

4

5. It is satisfactory to state that the; volume of varied, business, representing an expenditure of over £1,000,000 for 1918, has so far been conducted without litigation. Throughout the period a close and careful inspection erve't all deliveries made lo lire military authorities has been exercised, and sue'h differences as arerse' have, under my control, been, promptly adjusted on a business basis satisfactory to the Department and reasonable to the supplier. 0. At the time erf writing the' military authorities have just completed estimates of their stores and supplies required ferr the calendar year 1919. As far as they can be costed at the moment, they will, if purchased, equal in value a total expenditure erf £950,000, against estimates of £1,300,000 for 1918, £1,400,000 for 1917, and £1,548,000 for- 1910. The purchases estimated lor 1919 comprise- £ Stores .. .. .. .. .. .. 200,761 Supplies.. .. .. .. .. ..581,034 Forage anel fuel .. . . .. . . . . 70,718 Drug's .. .. .. .. .. .. 18,000 Contingencies .. .. .. .. .. 79,487 making a. total of .. .. .. .. .. .. £950,000, which, as indicated in the general remarks above, shows a reduction on the operations of previous years. 7. In accordance with the desire of the' Hon. Minister of Defence, my Department has made purchases for the' military dry canteen at Featherston since it was taken over from the contractors. The purchases ser made have been arranged for on the same lines as for official purchases —namely, the Canteen Committee is in a position to stipulate what class and quantity of goerels it prefers, and to requisition my Department to purchase accordingly. Under this arrangement orders to the value of £61,000 have been placead through my Department, the, total expenditure by the canteen for supplies being £74,275, according to a report which the committee has been good enough to furnish me. At the time of writing arrangements are being niader for a military dry canteen to be inn at Trenthani on the; same lines as at Fcatherston, and I trust with equal success. 8. The Defence Expenditure Commission terminated its report by a statement reflecting favourably on my Department-as well as to the military establishment. The' Commission stated— (I.) £40,000,000 spent and no frauds. (2.) An Army of 100,000 men excellently and full;/ equipped, and carried Or the erthcr emd of the' world. (3.) Supplies hare been purchased well, and, although lire actual purchasing has been done outside the Defence Department, military officers have- been responsible that quantities have been sufficient and not excessive. The only remark made by the Commission by way of suggesting improvement was referred to my Department by Defence Headquarters on the 7th August last for nrv comments. The remark of the Commission was "At present the' name erf the successful tenderer is published only if he consents. It weruld seem almost wiser to encourage competition—that in all cases name's erf successful tenderers, with prices and conditions of supply, should be published. The question is now under consideration of having a business man representative of this Supplies Board acting with each of the four District Headquarters erf the Defence Department." I accordingly requested my advisers ter again review the policy 1 have pursued in these matters, and after consideration my chief executive officer was directed ter forward the following reply : " In replying to your memorandum of the 7th instant (73/10/ A.G.) I have to advise that action has been taken lo appoint local representatives of the .Minister at Dunedin, Christchurch, and Auckland, 'fire gentlemen appointed are as follows: G. J. Miller-, Esq., commercial broker, Auckland ; W. R. Gordon, Esq., erare erf Messrs. Neill and Co., Dunedin ; and J. I. Royds, Esq., care e>f Messrs. Royds Bros, and Kirk, Christchurch ; and they as occasion arises confer with District Headquarters, particularly with the Assistant Directors erf Supplies anel Transport. "As regards the question of publishing the names of tenderers, &c, the Minister in Charge made an announcement to Parliament in. his report dated Kith June, 1917, as follows : ' During flic currency of the business under review 1 have frequently been requested ter giver information to unsuccessful tenderers; anel in this connection 1 have ter report that my advisers, at my request, went, fully into this matter, with the result that I decided— («) To giver tire' price only, quoted by successful tenderers, to any unsuccessful tenderers for the same- supply : (b) not to disclose the price quoted by an unsuccessful tenderer; (c') not to disclose; the' name of any successful tenderer without his consent. ' The reason for acting as indicated in (v) above' is to satisfy unsuccessful tenderers that their quotations were not the lowest. It has apparently been the; practice of the Government Departments for some year's past to give this information, although it is not the' practice of mercantile houses to do ser. '' The reason for (b) above—namely, not giving the prices quoted by unsuccessful tenderers—-is that such information would, possibly reveal to successful tenderers opportunities for quoting higher prices the next time they were invited ter tender for similar supplies.