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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. 0. 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

Signature Bureau of Office

Department

Code 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 in. curred 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:

Percent 3d quarter 1954, actual.

213. 04 4th quarter 1954, actual.

170. 16 1st quarter 1955, forecast

166. 66 2d quarter 1955, forecast-

186.95 3d quarter 1955, forecast_

614. 26 4th quarter 1955, forecast.

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

Super burden

Overtime.--Provisions for overtime premiums amounting to 2.9 percent of the total estimated labor cost has been included in the third segment prices.

Night shift premiums.-Night Shift premium included in forward prices has been computed in accordance with General Motors policy which provides for a 5 percent and 712 percent wage premium for second and third shift work, respectively.

Cost of living allowance.—Cost of Living allowance included in our proposed prices was computed at rates of $0.07 per hour for all hourly rated employees and $35 per quarter for salary employees.

Flight.-The estimated cost for forward pricing was based on the experience gained in recent months for the flight activity.

Repair of GFAE equipment.-Change Order No. 26 provides that costs incident to the repair and modification of G. F. A. E. shall be considered an item of cost under the Supply Contract. Therefore, included in forward prices is an amount to provide for the Contractor anticipated costs resulting from such repair and modification. This amount is based upon the assumption that work of this nature to be authorized in the forward program will somewhat parallel that of the second segment.

Factory cost adjustment.-There are two major items that make up this credit to total plane cost: (1) Cash discount and (2) Revenue from the sale of scrap. The forward estimate was based on current experience.

General and administrative.—The General and Administrative item in the cost proposal includes expenses generated by the executive group of the plant as well as expenses of the Central Offices (General Motors and BOP) allocated to this activity. Other expenses such as taxes based to income, loss on excess and obsolete material and loss on commitment cancellations are also grouped in this category in accordance with General Motors policy.

(Note attached to document is as follows:)

2ND REDETERMINATION, BOP PROPOSAL
BUICK-OLDSMOBILE-PONTIAC ASSEMBLY DIVISION,

GENERAL MOTORS CORP.,

Detroit 2, Alich., February 10, 1955. Commander Headquarters Air Materiel Command Wright-Patterson Air Force Base, Ohio Attention : MCPHFD Through : Air Force Plant Representative Mobile Air Materiel Area Air Materiel Command Buick-Oldsmobile-Pontiac Assembly Division General Motors Corporation Kansas City, Kansas Subject: Proposal for Redetermination of Prices of F-84F Spare Parts Furnished

under Contract No. AF 33 (038)-18503

Gentlemen : Consistent with the provisions of the subject contract, the Contractor, in its letter of February 3, 1955, proposed redetermined prices for F-84F airplanes furnished under the contract; and now proposes redetermined prices for F-84F spare parts.

At the date of this proposal, the contract value of spare parts for the last 362 airplanes covered by the contract may be summarized as follows: Exhibit 4, Contract No. AF 33(038)-18503, Priced Spare Parts

List, as amended by Change Orders No.'s 32, 32–2, 32-4 and 32-5_

$14, 877, 068. 68 Revision to Exhibit 4 (price proposal dated January 19, 1955, submitted by Contractor, but Change Order not yet issues).

748, 001. 66 Shipments of spare parts through December 31, 1954 amounted to $1,678,798.92, (Schedule A). The Contractor has completed a study which indicates that the price of spare parts can be reduced by 6.8 percent effective with delivery of the 299th F-84F airplane. It is estimated that the value of spare parts undelivered at that time will approximate $13,100,000.00. The Contractor proposes that the contract prices of undelivered spare parts be decreased by afore

said 6.8 percent; and will advise the government of the unshipped value as of the effective date of the price redetermination.

12,132,472; 852,000, additional business. Reduce by 0.07 percent.

The Contractor further proposes that this reduction of total contract price be accomplished by the application of a 6.8 percent credit to the total of each invoice covering spare parts shipped on and after the date of delivery of the 299th airplane, and that all such invoices by priced at the sales prices reflected in the existing Priced Spare Parts List (Exhibit 4), as amended. Very truly yours,

John F. GORDON, Vice President.

SCHEDULE A

GENERAL MOTORS CORPORATION

BUICK-OLDSMOBILE-PONTIAO ASSEMBLY DIVISION

Analysis of exhibit dollar spare parts shipments through December 31, 1954 Material: Allied (schedule A-1)-

$1,757. 86 Outside---

1, 345, 696. 51 Inbound transportation.

5, 841. 09

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Analysis of allied material content in exhibit 4 spare parts shipments through

December 31, 1954
Allied defense suppliers at cost value: Delco appliance---

$827. 79 Material at invoice price from redeterminable allied suppliers: Saginaw steering gear--

924. 54 Allied commercial suppliers at invoice price: Packard electric..

5. 53

1, 757. 86

Total allied (to schedule A). 1 The prices of this division have been redetermined by the Air Force.

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I certify that the information contained herein for the period ending December 31, 1954, has been compiled from the records and books of the Buick-Oldsmobile, Pontiac Assembly Division, General Motors Corporation in accordance with

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