a 
its costs, but a stage may then be reached where some definite 
accretion of expenditure on staff or buildings as a result of 
accepting such orders cannot be avoided. At that point, if 
the general principle were consistently applied, the differential 
cost might very well greatly exceed instead of falling below 
the percentage charge. Finally, it must not be assumed that 
it is necessarily simpler for a Department to charge the bare 
cost of goods than the full cost. The War Office vocabulary 
rates are, for example, worked out so as to include the per- 
centage additions; similarly, in some cases the Post Office have 
standard rates of charge to all customers. To charge bare cost 
to Exchequer Departments in such cases might involve extra 
work and not: lessened work. 
Whatever, therefore, may be said in theory for determining 
the charge strictly on the basis of the extra expense to which 
the agent Department is put, these rather serious objections 
would arise in practice. On a review of the extremely varied 
and complex circumstances which govern these services we are 
of opinion that no single rule is entirely free from objection. 
Some general policy must, however, be laid down, and we 
make the following recommendations believing that on the 
whole such demerits as they possess are greatly outweighed by 
the advantages they offer. 
Taking in order the classes of service referred to in para- 
graph 6, our recommendations are as follows* :— 
In the case of Class A. Manufacture or repair of goods in a 
Government factory, no charge should be added to the minimum 
cost except for delivery. When inspection is provided as a 
separate service, e.g., where the War Office inspection branch 
proves rifles manufactured at Enfield, this would be charged 
for as a professional service (see Class E below). 
In the case of Class B. Supply of goods from store, we sug- 
gest that the normal case will be adequately met by a uniform 
agency fee of 2% per cent. This figure is intended to cover items 
like the inspection, storage and handling of goods. We do not 
think any provision is required for items such as headquarter 
charges for administration. No variation of the percentage of 
24 would in our opinion be called for save in certain cases, 
mainly in the Service Departments, where inspection costs are 
high. Some reasonable addition for inspection should, we think, 
be made in such cases by mutual agreement. The application 
of the rule in particular Departments will require consideration, 
so as to secure the greatest simplicity in working. For example, 
where the Department habitually uses a priced vocabulary, the 
prices including overheads, it may be simpler to make a uniform 
percentage deduction from vocabulary price than to add a per- 
centage to bare cost. 
" For Medical Services see Note 1 to Appendix,