Hon. Colonial Secretary,
This Railway is being constructed under the "Departmental System". What that system is and how it is to be worked were defined and laid down in the important Memorandum which formed an enclosure to a despatch written by Mr. Lyttelton on 5th December, 1904, published in Blue Book Cd.2325. (Have you and the Chief Resident Engineer and the Local Auditor copies of this?) It is there said:- "By the Departmental system is meant that the Government becomes its own Contractor......the careful preparation of preliminaries affords the Government not only a reliable forecast of expenditure but also a means of watching and checking the progress of work. The success of the system depends almost entirely on the Government being able to entrust the control of the work to an officer of its own..............and on its being prepared to vest in that officer the same large measure of discretion as is given by a Contractor to his Chief Agent - usually styled the Chief Resident Engineer - He is engaged by the Government; he engages his own labour, orders through the Crown Agents his own materials. He is for discipline and general purposes the servant of the Government to whom he looks for instructions apart from the technical conduct of the works.
2.
I have omitted passages and only quoted what I wish to refer to. The Departmental system has been abused but I think that many of the criticisms directed against it are justified only by the fact that the Government has not realised its proper position and has in fact accepted the Chief Resident Engineer as though he were a Contractor. My view is (a) that he is "a servant of the Government" - "an Officer of its own" - responsible only for the technical work, and all instructions outside technical Railway construction emanate from the Government. It lies with the Government to grant him such a measure of discretion as it sees fit.
5.
I am personally of opinion that a Government should in its own interests closely supervise local Contracts, for