The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-09-12
NAVY BATTLES
PRICE BOOSTING
ON NEW SHIPS
Rejection of Cruiser Bids
Indicates Intention to
Resist Increase.

~ grupps-Horard Nc'rspaper Alliance
WASHINGTON. Sept I2.-Back
Of the Nays rejection this week
Of bids on a l0000-ton cruiser IS a
determination 10 resist sharp price
increases on this type Of ship.
The private shipbuilders raised
their bids on the proposed new war
ship approximately 80 per cent
more than those Of the boom Pc
Rod Of l927-l929.
This IS. however. consistent with
evidence submitted TO the Senate
Munitions Committee which investi-
gated Warship construction earlier
this year. Testimony then showed
that the builders boosted prices
whenever the Navy had a substan-
tial construction program to under
take.
This practice was confirmed by
Admiral Robinson, who was asked
BY the committee: They the ship
builders were frank enough 10 say
they were putting up prices because
Of the great amount Of work at the
time2'
Full Treaty Strength Is Goal
There is no question about that"
he replied
The Navy at present is laying
keels 10 bring the Navy to fun
treaty strength. The immediate pro-
gram involves $50 Dos. 800 for the
private shipbuilders, with more to
come.
Bids opened Monday disclosed the
highest prices on record for
10O00-ton cruiser. They ran from
S15.525.OOO to s1792OOO0. In 1927,
this type Of ship cost approximately
S1O.75O.OO0
Warship bids are made on two
baseS-the fixed price" and the
adjusted price" on the former
basis the government VIII pay no
more than the fixed price" figure.
On the latter basis. sudden in
CTeases in labor or material prices
will be taken into consideration in
the final payment: thus the govern
ment may pay more than the
original figure indicates
Even the adjusted price in the
current bidding ran to SIS $50 900.
Consequently the Navy Department
rejected them all and asked for new
ones to be submitted in October.
Navy Never Examined Costs"
Evidence submitted to the NUM-
tons committee showed that the
Navy never examined the under
lying costs or profits of the private
builders. The figures studied by the
committee we're all news to it.
The Nays ignorance of the cost
of naval construction in private
yards was confirmed in its assertion
that the 1927 prices we're fair and
provided "A fair basis on which TO
Justify later cruiser awards"
Committee investigators. through
examination of the shipbuilders'
books. showed that on cruiser con-
struction under the 1927 program
the Newport News Shipbuilding d
Dry Dock Corp. made a profit of
S5.60185l. or 80 per cent, on two
cruisers: Bethlehem Shipbuilding, a
subsidiary of Bethlehem Steel, made
25.4 per cent on one cruiser. and
New York Ship Building made 36.7
per cent one one.
Homer s. Ferguson. president of
Newport News. told the committee
I was perfectly amazed that we
made so much
Estimate 40 Per cent Profit
s. Wiley Wakeman. manager OF
Bethlehem Ship. testified:
We figured our profit would De
1898 900. It actually turned out to
be $4,000 900. We estimated We
would make a profit of 1912 per cent
and We actually made profit of
25.4 per cent-which surprised us
very much"
Taking the cruiser Chester as an
example. the committee showed that
this unit of the 1927 program cost
the builders S5.734.462 for labor and
material. To this was added over
head" of s2,239,195. an item which
none of the Builders explained to
the committees satisfaction. Then
came profit of S2.946. 7O5. making
total OF S1O.973.657. Profit amounted
10 26.9 per cent.
On the basis of the current bids.
one expert here estimated that
profits might easily run to around
40 per cent as neither steel nor labor
has touched the Deak of 1Q27-lq2g.