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Note.-In case of corporation, witnesses not required but certificate below must be completed. Type or print names under all signatures.

Note.-Contractor, if a corporation, should cause the following certificate to be executed under its corporate seal, provided that the same officer shall not execute both the contract and the certificate.

CERTIFICATE

I, J. C. Davidson, certify that I am an Assistant Secretary of the corporation named as Contractor herein; that John F. Gordon, who signed this contract on behalf of the Contractor, was then Vice President of said corporation; that said contract was duly signed for and in behalf of said corporation by authority of its governing body, and is within the scope of its corporate powers.

(Corporation seal.)

(S) J. C. DAVIDSON

EXHIBIT "1"-TO CONTRACT AF 33 (038)-18503

It will be the responsibility of the Prime Design Manufacturer, Republic Aviation Corporation, (hereinafter referred to as "Republic") to furnish handbook data for the F-84F aircraft being procured on this purchase request. This is in accordance with AMC Headquarters Office Instruction No. 5-28.

It will be the Contractor's responsibility, however, to see that the Handbook Data Department at Republic is advised of each and every change that will make the General Motors built F-84F aircraft differ from the Republic built F-84F. Reports shall be submitted to Republic by the Contractor within thirty (30) days following authorization of the change. Changes will include any Contractor-furnished equipment items which (though interchangeable), are procured from different sources than Republic, permitting Republic to keep their Contractor-furnished Equipment List up to date.

It will also be the Contractor's responsibility to see that a copy of the Flight Operating Instruction Handbook, the Erection and Maintenance Handbook, and the Inspection Requirements Handbook for the F-84F, as well as any temporary revision pages, are placed in the aircraft flyaway file for each General Motors produced F-84F, also, is in accordance with AMC Headquarters Office Instruction No. 5-28.

After completion of production of all the aircraft on the contract, Contractor shall forward a letter to the responsible finance officer with a copy to Contract Files, Headquarters, Air Material Command, stating that all changes have been reported to the Handbook Data Department at Republic or that no changes were made which required reporting. This will complete and/or fulfill the handbook data requirements.

The Contractor, shall, as a part of the work called for under this contract. furnish to Republie, engineering information relative to any Government authorized deviation from Republic's engineering drawings. This shall be prepared in such a manner that Republic will be able to reflect such information in the engineering drawings being furnished to the Government and to the extent necessary for the maintenance and operation of the article procured hereunder.

PRESERVATION, PACKAGING, PACKING, AND MARKING REQUIREMENTS

The preservation, packaging, packing and marking requirements set forth on this form shall apply to any contract issued thereon, and supersede any conditions inconsistent therewith.

EXHIBIT 2-TO CONTRACT AF 33 (038)-18503

PURCHASE REQUEST NO. CLASS 01-N (F84-F)

1. Specification packaging and packing: (See par 9)

A. Preservation and packaging:

(1) The following items shall be preserved and packaged in accordance with Spec. No. AN-F-13.

(2) The following items shall be preserved and packaged in accordance with Spec. No. AN-P-13: Method: See para 1B (2) below.

(3) The following items are exceptions to Spec. No. AN-P-13 and do not require preservation.

(4) The following items shall be packaged in unit quantities as shown and shall comply with paragraph five. (When commercial preservation, packaging and packing is specified, par 5 will not apply.) As established at the initial Provisioning Conference and/or respective Property Classes and coded in contractual documents.

(5) The following items shall be packed in intermediate containers with the quantity of unit packs as shown, and shall comply with paragraph five. B. Spare parts preservation and packaging lists.

(1) Are not required

(2) Will be established by AMC Packaging Team and supplied by the Contractor in accordance with AMC Reg. 71-1.

(3) Will be supplied by the Contractor in accordance with AMC Reg. 71-1, par

C. Packing.

(1) Export-type: Exterior shipping containers shall comply with paragraphs 6A, 6A (1) and 6B. Items and quantities to be determined by Hq AMC

(2) Domestic-type: Exterior shipping containers shall comply with paragraphs 6A, 6A (2) and 6B. Items and quantities to be determined by HQ AMC

(3) Air-type: Exterior shipping containers shall comply with paragraph 6A (3).

2. Commercial, preservation, packaging, and packing

A. Preservation, packaging and packing shall conform to Contractor's standard commercial practice, except as outlined in paragraphs 1A (4) and 6A (2) and 6B.

3. Identification and marking (For tags and labels paragraph 7 shall apply)

A. Items shall be marked in accordance with: Spec. No. AN-M-13. Interior & Exterior shipping containers shall be marked in accordance with MIL-STD129.

4. Definitions

A. "Preservation": The application or use of adequate protective measures to prevent deterioration resulting from exposure to atmospheric conditions during long-time storage.

B. "Packaging": The application or use of appropriate wrapping, cushioning, and/or containers, and complete identification, to the designated quantity and method established as a unit.

C. "Unit package": A package that contains either a single item or multiples thereof.

D. "Intermediate package": An interior container holding two or more identical unit packages.

E. "Packing": The selection or construction of the shipping container and assembling of items or packages therein, together with any necessary blocking, bracing, cushioning, weather-proofing, exterior strapping, and marking of shipping container for identification of contents and routing.

5. Packaging:

A. When used for the unit and intermediate package, containers shall meet the requirements of Spec. No. JAN-P-100, paragraph headed "Interior Packaging and Packing."

B. Metal containers in accordance with Spec. Nos. AN-C-173 and AN-C152, when specified, shall be furnished by the Government to the Contractor. The Contractor shall request the total required number, type, and size of container, from the Contracting Officer, 40 days prior to use and in addition shall supply to the Contracting Officer a general schedule showing monthly metal container requirements.

C. Cushioning material, where required, shall be in accordance with Spec. No. JAN-P-100, paragraph headed "Cushioning Materials." Excelsior will not be acceptable.

D. Identical items of the same property class only will be packed in each unit container and intermediate container.

E. Boxed or wrapped unit packages may be placed in suitable intermediate container and all bagged items shall be packaged in intermediate containers.

6. Packing

A. Exterior containers, insofar as possible, shall be uniform in size and shape, and shall contain identical quantities of like items. The gross weight of each exterior shipping container shall be limited as follows: approximately 200 pounds for export shipment, approximately 500 pounds for domestic shipment except when these respective weights are exceeded by the weight of a single packed item. Communications equipment shall be limited to approximately 70 pounds except when a single packed item exceeds this limitation.

(1) Unless otherwise specified, export-type exterior containers shall be in accordance with Spec. Nos. JAN-P-105, JAN-P-106, or AN-C-118, as applicable. When JAN-P-105 or JAN-P-106 is used, each shall be lined with a case liner of materiel meeting the requirements of Spec. No. JAN-P125, sealed with an adhesive conforming to Spec. No. JAN-P-140. However, if boxes constructed in accordance with these specifications contain a single sealed box in accordance with Spec. No. JAN-P-108 and appendix, or if each of the contained packages is individually waterproofed as described in Spec. No. JAN-P-100, paragraph headed "Fiberboard Interior Boxes," no case liner is required. When plywood is used, it shall conform to type B, condition I, or better.

(2) Unless otherwise specified, domestic-type containers shall conform to Consolidated Freight Classification Rules and be designed to insure acceptance by common or other carrier for safe transportation at the lowest rate to the point of delivery. Where fiberboard is used, such fiberboard shall have not less than a 275-pound minimum Mullen Test, and gross weight of container and contents shall not exceed 70 pounds for a type 1 load and 40 pounds for a type 2 load. Type 3 load shall not be packed in fiberboard boxes unless converted to type 1 or type 2 by suitable interior packaging. For description of types of loads, refer to Spec. No. JAN-P-100, paragraph headed "Selection of Shipping Container."

(3) Where air shipments are specified, exterior packing shall be in accordance with T. O. 00-85-9.

B. Cushioning, blocking, bracing, and bolting, where required, shall be in accordance with Spec. No. JAN-P-100, paragraphs headed "Cushioning Materials," "Bolting," and "Braces and Blocks."

7. Marking

A. Tags and labels, when required, shall be in accordance with AF Form 50B, AF Form 50C, or approved contractor's tags or labels. Labels shall be affixed by means of cement conforming to Spec. No. 1413. Labels, tags and other nonwater resistant markings shall be protected by a thin, even coating of cement conforming to Spec. No. 14137.

8. (Deleted.)

9. Tests

When prepared in accordance with par 1, packages and containers as determined by the Government inspector shall be required to pass tests of applicable specifications.

10. Subcontractors

The Contractor is responsible for necessary action to see that requirements set forth in this form are complied with by his subcontractors where shipments are made direct to Government establishments.

11. Specification

All specifications applicable to the requirements herein shall be of the issue in effect on the date of invitation for bid.

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Remarks: Above security requirements approved by department of defense representative.

Typed name and title
Bureau of Office

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Mr. COURTNEY. Next, Mr. Chairman, as you have explained, the purpose of this study was to reconstruct the conditions that prevailed and the knowledge that was available and the knowledge that was used and the information that was used at the time of the negotiation of a price revision at a point fixed in the contract which was after the completion of 299 planes and before work commenced on the 300 remaining in the last increment or segment.

Now, Mr. Chairman, under the contract and in accordance with established procedures, General Motors Corp., over the signature of Mr. Gordon, its vice president, who is here present this morningGeneral Motors submitted a pricing proposal, at least we shall so denominate it. I would like to offer that for the record, Mr. Chairman, and call attention particularly to schedule A on page 8 to which reference will be made and copies of which are on the members' desks. Mr. Chairman, there are penciled notations on the copy, photostatic copy which I have in my hand, and these have been identified as having been made by one of the Air Force negotiators.

Mr. GAVIN. Which particular document is this?

Mr. COURTNEY. Schedule A.

Mr. HÉBERT. Schedule A.

Mr. COURTNEY. And it is to that portion of the pricing proposal to which attention will be directed in the course of this presentation by Mr. Kuhn and Mr. Tyler this morning.

Likewise, we would like to direct your attention to the experience, cumulative average experience curves and data which are attached to the pricing proposal and reference will be made to them, in particular to the number of hours projected, estimated and experienced in the course of the construction of these planes.

Mr. Chairman, I offer that for the record.

Mr. HÉBERT. Without objection.

(The data referred to is as follows:)

BUICK-OLDSMOBILE-PONTIAC ASSEMBLY DIVISION

DEVELOPMENT OF FORWARD PRICE DATA SUPPLEMENTING PROPOSAL DATED FEBRUARY 3, 1955, CONTRACT NO. AF 33 (038)-18503

Estimated material cost

"Estimated Material Costs", included herewith, shows in detail the estimated cost of direct material included in the prices quoted for the third segment of planes. The detail set forth in this exhibit shows a list of parts individually priced, representing approximately 84 percent of the total material value per plane.

The unit prices indicated for the Allied Divisions are firm, with the exception of Fisher Body Division, and Delco Appliance Division. The contribution of these Divisions is included at cost.

The unit prices shown for material purchased from outside Suppliers are firm and are supported by Purchase Orders. However, forward prices are subject to further change resulting from price redeterminations of the following subcontractors currently in process:

Liquid Carbonic

Micro Precision Co.

Norge Division, Borg-Warner Corp.

Proctor Electric Co.

Vendo Co.

Miscellaneous materials approximating 16 percent of the total material value have been included at the costs experienced for the last airplanes in the second segment.

Direct labor

Included herewith are direct labor charts showing actual and estimated direct labor performance by shops, together with a summary showing the total plant performance. The solid line on each chart shows actual average hours for units produced through December 31, 1954, and the broken line represents the estimated hours to complete the remaining units under contract.

The estimated labor hours for each shop were developed by giving consideration to the cumulative actual trend line and known conditions which would affect future performance. Readings taken from the shop charts were summarized and plotted on the total plant chart. The trend line developed from this information indicates that a continuance of the 74 percent curve experienced for the first segment was maintained through the 299th plane.

To compute the direct labor for forward pricing the estimated hours required to complete the remaining planes under contract were priced at the prevailing rates per hour (adjusted by $0.05 per hour effective June 1, 1955) by shops and resulted in a composite rate of $2.04 per hour for the hours estimated to be incurred subsequent to December 31, 1954. This, when combined with the process labor as of December 31, 1954, available for the third segment, results in an overall rate per hour of $2.02.

Burden

The burden cost per plane included in the proposed forward prices is the result of estimating expenditures to complete the planes under contract plus the applicable burden in process as of December 31, 1954.

The estimate to complete was based upon the experience gained in recent months adjusted to compensate for influencing factors anticipated in the forward program.

The following incurred burden rates by quarters were arrived at by using the burden dollars developed on the basis outlined above:

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The change in trend to an increasing burden rate in the forecast quarters is the direct effect of the contract buildout.

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