Buick-Oldsmobile-Pontiac assembly division-Continued Second redetermination, Buick-Oldsmobile-Pontiac proposal Schedule A: Analysis of exhibit, dollar spare parts ship- ments through December 31, 1954--- Schedule A-1: Analysis of allied material content in exhibit 4, spare parts shipments through December 31, 1954....... Schedule A: Proposed forward prices for 300 F-84F airplanes. Schedule A-1: Analysis of allied material content.. Clapsaddle, H. W., divisional comptroller, General Motors Corp., Excerpt from letter, dated June 18, 1957, of General Motors Corp., 2595 Excerpt from Public Law 245, 82d Congress, re contract auditing. Exhibit A: Principal delivery schedule changes and the actual air- craft deliveries, contract No. AF 33(038)–18503.. General Motors correspondence re proposal for redetermination General Accounting Office comments re material costs... 2772, 2779, 2786 Gordon, John F., to Lt. Col. George W. Thompson, Pricing Staff Division Deputy Director, Procurement Headquarters, Air Ma- teriel Command, Wright-Patterson Air Force Base, Ohio, dated Dated April 26, 1957, from the Comptroller General to Harlow H. 2603 Dated June 3, 1957, from Joseph Campbell, Comptroller General, 2606 Dated July 19, 1957, from Congressman Hébert to Joseph 2557 Dated August 2, 1957, from Dudley C. Sharp, Assistant Secre- Dated August 23, 1957, from John J. Courtney to A. F. Power. Dated August 27, 1957, from John J. Courtney to A. F. Power.. Dated September 10, 1957, from A. F. Power to John J. Courtney Dated October 14, 1957, from Comptroller General of the United Letters, exhibits, etc.-Continued Page 2851 Loofbourrow, B. D., deputy chief, Pricing Staff Division, Air Materiel Powers, Lawrence J., Director of Defense, Auditing and Accounting Division, General Accounting Office: Action taken by the Air Force, more effective pricing negotiations. 2566 Summary of price reductions which should have been attained. Appendix A: Letter, dated March 28, 1957, from Dudley C. Sharp, Assistant Secretary of the Air Force, to the Comptroller Appendix D: Letter, dated July 8, 1957, from Joseph Campbell, Comptroller General to the Secretary of the Air Force-- Quotation in Aviation Week of part of testimony of Hon. Lee White, Section 3-802.4, Air Force procurement instructions, entitled "Nego- Thompson, Lt. Col. George W., United States Air Force, Chief, Vinson, Hon. Carl, Chairman, Committee on Armed Services: 2901 2556 2556 STUDY OF AIR FORCE CONTRACT AF 33 (038)-18503 GENERAL MOTORS CORP., BUICK-OLDSMOBILE-PONTIAC ASSEMBLY DIVISION MONDAY, JULY 22, 1957 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE FOR SPECIAL INVESTIGATIONS, Washington, D. C. The subcommittee met at 10 a. m., Hon. F. Edward Hébert (chairman of the subcommittee) presiding, with the following members present: Mr. Hess, Mr. Gavin, Mr. Rivers, Mr. Cunningham, Mr. Bates, Mr. Hardy, Mr. Osmers, and Mr. Miller. Mr. HÉBERT. The committee will be in order. Members of the committee, before proceeding this morning the Chair wishes to make a statement in connection with our meeting of last Saturday morning, and the subsequent developments. Because of the development of events which the committee is familiar with, Mr. Hurley's not being prepared at the time, or not desiring to comment on the matter that was put in the record at the direction of the committee, it was thought advisable that as far as the aircraft engine hearing is concerned it be suspended until next Monday, when we will pick up again, and then await the pleasure of Mr. Hurley before we called the Air Force witnesses in connection with the matter discussed. In the meantime, the subject matter of today's hearing was set at the direction of the chairman of the full committee, and, with the approval of the members of the subcommittee, I desire to make this statement: This hearing will be a review with representatives of the General Accounting Office, headed by Lawrence J. Powers, the Director of the Division of Defense Accounting and Auditing, to discuss with us the findings made by the General Accounting Office on Air Force contract No. 33(038)-18503, dated April 25, 1952, for the production of 599 F-84 airplanes for the United States Government. We have been directed by the chairman of the full committee to take this matter up immediately. It is of far reaching importance and bears close examination because of the subcommittee's recent report on negotiated contracts and because of the pendency of H. R. 8711, which would amend the Armed Services Procurement Act to correct many abuses in negotiated procedure. The matters which wil be raised this morning, as we understand from a short briefing, may well require immediate legislation, and, of course, that would require prompt action on the part of the subcommittee. I shall not detail the matter further excepting to say that this was a contract performed by General Motors Corp., Buick-OldsmobilePontiac assembly division, located at Kansas City, Kans. Now, Mr. Courtney, do you have your witnesses? Mr. COURTNEY. Mr. Chairman, we have as witnesses this morning Mr. Lawrence J. Powers, who is Director of the Defense Auditing and Accounting Division of the General Accounting Office, sitting in the center of the group. On his right, Mr. W. A. Newman, Deputy Director. And to the extreme right, Mr. Stephen Haycock. Mr. Power's left-Mr. James Hammond and Mr. David Lambert, of the General Accounting Office. Mr. Lambert, as you know, is legislative and liaison representative with the Congress, from the General Accounting Office. Mr. Chairman, as a part of the record, and without reading it, I should like to offer and have included the letter of transmittal from the Comptroller General of the United States to the chairman of the committee relating to this subject matter. (The letter is as follows:) Hon. CARL VINSON, Chairman, Committee on Armed Services, House of Representatives. JULY 19, 1957. DEAR MR. CHAIRMAN: Herewith for the use of your committee is a copy of our report on review of Department of the Air Force contract AF 33 (038)–18503 with General Motors Corp., Buick-Oldsmobile-Pontiac assembly division, Kansas City, Kans., for the manufacture of 599 F-84F airplanes. Our examination was made pursuant to provisions of the Budget and Accounting Act, 1921 (31 U. S. C. 53), the Accounting and Auditing Act of 1950 (31 U. S. C. 65), and the Armed Services Procurement Act of 1947, as amended by the act of October 31, 1951 (41 U. S. C. 153 (c)). This report shows that the contractor realized a profit of $17,459,200 in excess of that contemplated in price-redetermination negotiations and that this additional profit resulted in part from inadequate analysis and evaluation by the Air Force of the contractor's pricing proposals. Our examination disclosed that the contractor's proposals included overestimates totaling $8,322,000 which were not considered in negotiations. Recognition of these overestimates by the Air Force should have resulted in substantial savings to the Government. After completion of contract performance, the Air Force requested, on at least three occasions, General Motors Corp. to consider making a voluntary refund on this contract, but the contractor declined to make any refund or otherwise adjust the contract prices. Based on the information available to us, including comments dated June 18, 1957, from General Motors Corp., there is serious question as to the legal validity of the negotiated prices. In order to resolve this matter, additional information was requested from the Secretary of the Air Force on July 8, 1957. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. Mr. COURTNEY. And the answer of the chairman of the full committee, and of the chairman of the subcommittee, to the letter of transmittal. (The letters are as follows:) Hon. JOSEPH CAMPBELL, Comptroller General of the United States, Washington, D. C. JULY 19, 1957. DEAR MR. COMPTROLLER GENERAL: I have just read your letter of July 19, 1957, No. B-125054, with which you transmitted a report and review made by the |