Evening star., 1938-02-20
MARITIME EXPERTS
CHECK SHIP BIDS
Cost Statisticians Seek to
Determine Cause of "Ex-
cessive" Asking Prices.
BY JOHN c. HENRY.

ny JUHN L. HENRY.
Expert cost statisticians of the
United States Maritime Commission
have called on at least one of the large
private shipbuilding firms of the coun-
try for lost minute itemization of
ship construction costs in an effort to
segregate the factors responsible for
the excessive" bids submitted the
Government early this month, it was
learned yesterday.
Although all bids were submitted in
some detail and with itemized work
sheets attached, commission officials
felt that the information made avail
able did not constitute an adequate
Justification Of the prices given. In
his letter to President Roosevelt de-
scribing the bids as excessive, former
Commission Chairman Joseph P. Ken
nedy remarked that the circumstance
was extremely difficult to explain" i"
Neither costs of labor nor of ma
terials could justify the price level, he
said
Accordingly. not content with the
routine analysis of bids by their cost
technicians here, the commission
dispatched two experts to the home
once OF one of the big bidders for
more searching examination of esti-
mates employed in drafting the bids.
This examination was under way
throughout the last week.
Firms Justify Bids.
Meanwhile. with a figurative shrug
OF their shoulders. the large shipbuild-
Ing companies privately are citing
some half-doZen circumstances in
justification of their high bids. Rough
ly. they follow:
l. The CO type of ships for which
the bids at issue were asked contain
various features for which little prece-
dent exists in estimating costs.
2. Application of the Walsh Healey
act calling for high wage and hour
standards in connection with produc-
tion of materials to be used in filling
Government contracts.
3. Taxes, particularly payroll and
undistributed corporate income levies
The latter, it is claimed prevented the
firms from retaining surpluses ade-
quate to balance possible losses in full
filling the contracts or to finance any
expanded facilities needed
4. Unstable labor conditions. which
make it difficult to estimate labor costs
over the two or three years needed to
complete the jobs under discussion.
S. Statutory limitation of profit
percentage on Government jobs which
forecloses any prospect of heavy mar
gin on one bid to counteract unfor-
seen loss on another.
6. Such factors of uncertainty as
unpredictable demands which might
be made by commission inspectors
during the construction work In this
regard, it was pointed out that the
private yards doing Navy work know
the general requirements of that de-
partment but that different standards
might be established arbitrarily by
the commission.
Contract Hazards Cited.
Feeling that these and other cir
cumstances have increased the hazards
faced by firms contracting to do the
work. most of the companies sub
mitted what they describe as safe"
bids in which an effort was made to
cover every possible unfavorable de-
velopment during fulfillment of the
contracts.
Although many of these factors will
anr,lv olSn fo naval h,Iildirr cv,oEoe
men for the private builders are pre-
dieting that the degree of excessive
ness will not be as great and may
not throw preliminary estimates for
this type of construction as far off as
Is feared.
With the commission awaiting the
further findings of its cost experts be-
fore deciding whether to discard the
bids for the - vessels desired, or
whether to chance letting the work to
the small yards which submitted lower
estimates, the problem of maritime
labor relations continued to vex the
legislators on Capitol Hill.
Pending before the Senate Commit
tees on Commerce and Labor are
amendments to the Merchant Marine
Act by which the railway labor media
ton law would be extended to the
shipping industry. Supported by the
Maritime Commission and with indi-
cations that many members of both
committees also are in approval, the
suggestion is under determined fire
from the maritime unions, the Labor
Department, the National Mediation
Board and the National Labor Rela-
tions Board.
Further committee consideration of
this issue will continue this week.