The Waterbury Democrat., 1942-08-21

ton, rate Of delivery or turnover, inventive contributions, economy in usage of materials, efii:iency in low ering costs), risks (such as increases in labor and material costs. inex- perience with new types of produc- tion, complexity of manufacturing technique, and delays attributable to unavailability of materials), f1- nancial record of bne company. ex- lent of conversion to war purposes, performance in the war effort, etc.
 "A company's overall profit before taxes on its war business and not the renegotiation of individual con- tracts provides the primary ap- proach for arriving at voluntary agreements in spirit of coopera- tion. The agreement to accept lowered operating profit may then be translated into the underling contracts. Profits are to be com puted before federal tax, since 1t IS not the function of the price ad- justment boards to vary profit mar gins so as to shift or circumvent the tax burdens imposed by con- gress. The agreements on reduced profits usually cover fiscal periods, and so require estimates on the un- fulfilled portions of the contracts. However, it is the policy to allow or iginal agreements to stand unless the actual figures with respect to such factors, as cost, volume of pro- duction, or nature of product prove to be materially at variance with the estimates upon which the set- dement's are based. In the final re- view, if 1t is shown that increased profits have resulted from extra ef- fort by the contractor to reduce costs or increase production, con- sideration will be given to this fac tor.
 "The Navy and Maritime Boards handle all their cases in Washing ton. The Army board, however, is decentralizing its operations as much as possible. Price adjustment sections will function in the field procurement offices, as well as in Washington, in behalf of the supply services and the material command of the army air forces. This should relieve much congestion and ob- viate the need for many company executives to travel to Washington for renegotiations.
 "This decentralization leaves the war department board, which is re- sponsible to the under secrecy of war, concerned primarily with gov erning policy and procedure Of its tions, whose recommendations and findings it will review. It will as sign companies for renegotiation proceedings. .
 "The war department board will conduct renegotiation with any company whenever because of the size of the company, the dollar vol ume of the contracts involved, the number of contracting services in terested, new questions presented or any other reason 1t appears that renegotiation by the price adjust ment sections of the supply services or the material command of the air forces is impracticable.
 "The work of these price adjust ILlGI1b UOdAOop HI VACuVAAA6 oAAO O'SA all problem, will not obviate the duty of the contracting officers Gun related to the boards) to continue to survey the specific contracts in their care. The boards desire to en- courage contractors to adjust prices for future deliveries under individ- ual contracts, wherever there would otherwise result an excessive over- all profit margin for the company This may avoid the needs of fur ther overall readjustments by the price adjustment unit.
 "The renegotiation program has been necessitated, not by any desire of American industry to reap un- due profits out of the war, but by the lack of foreknowledge, when contracts were let, of what the costs of a new war product would be under conditions as they prevail to- day. The program is, therefore, tribute to the ability of American industry to reduce unit cost of un- foreseen levels through mass pro- duction, production efficiency ane progressive technology"