AZ vs. CA:10 California Exhibits, Vol. X; Nos. 458-528

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0 Subsequent to VJ-day the Navy Department reviewed all of its outstanding contracts; and upon application of a rough rule of thumb under which all contracts less than 5 percent complete were to be subject to cancellation, it was at first proposed that the project be abandoned. As a result of protests made by San Diego authorities the matter was reconsidered and it was decided to proceed with the construction of the aqueduct. The War Department made its share of the estimated construction costs available to the Navy Department, but the Federal Works Agency declined to do so when requested after VJ-day on the ground that Congress had indicated that Lanham Act moneys (out of which its contribution was to come), were not to be expended for this purpose. Notwithstanding this refusal of the Federal Works Agency to participate, the Bureau of Yards and Docks of the Navy Department went ahead with the project. The work is still proceeding and it is contemplated that it will be completed before the end of this year at a total cost of about $14,000,000. At the conclusion of the negotiations for the continuance of the project, the Navy Department entered into a contract, dated October 17, 1945, with the city of San Diego, whereby the Department undertook to complete the aqueduct and the city undertook to lease it when completed for a period not exceeding 32 years, at an annual rental of $500,000, the lease to "continue until such time as the city has paid to the Government, in rentals, the full amount of the true cost to the Government * * * of the aqueduct." Two options were also given the city: First that at intervals of 5 years it might request the contracting officer, who was named as the Chief of the Bureau of Yards and Docks, to fix a purchase price