GENERAL SERVICES ADMINISTRATION, Re Contracts Nos. GS-OOP-(D)-12008 and GS-OOP-(D)−12214. World Center Building, Washington 6, D. C. GENTLEMEN: Our letter of April 7, 1955, proposed that the Government's "call" purchases of aluminum pig under the subject contracts for the first and second calendar quarters of 1955 be reduced to a total of 48,560,000 pounds on condition that 41,120,000 pounds be made available by you to nonintegrated users over and above the total amount which you had previously delivered or agreed to deliver to such users during the first and second quarters of 1955. Your letter of April 13, 1955, advised that you were unable to accept the above condition and proposed that said condition be deleted. Subsequently you proposed a substitute provision. The Government cannot accept the proposal made in your above letter or the substitute provision proposed by you. We therefore request that you reconsider your above position and advise us the result thereof as soon as possible. Very truly yours, A. J. WALSH, Commissioner. GENERAL SERVICES ADMINISTRATION, Re Contracts Nos. GS-OOP-(D)-12006; GS-OOP-(D)−12143; GS-OOP-(D)– 12192; GS-OOP-(D)-12213. KAISER ALUMINUM & CHEMICAL CORP., GENTLEMEN: Our letter of April 7, 1955, proposed that the Government's "call" purchases of aluminum pig under the subject contracts for the first and second calendar quarters of 1955 be reduced to a total of 89,250,000 pounds on condition that 53,700,000 pounds be made available by you to nonintegrated users over and above the total amount which you had previously delivered or agreed to deliver to such users during the first and second quarters of 1955. Your letter of April 15, 1955, returned our proposed amendment unsigned, advised that you were unable to accept the above condition, and proposed a substitute provision. The Government cannot accept the substitute provision proposed by you. We therefore request that you reconsider your above position and advise us the result thereof as soon as possible. Very truly yours, A. J. WALSH, Commissioner. REYNOLDS METALS CO., Richmond, Va., April 13, 1955. Re first half 1955 stockpile "calls," contract GS-OOP-(D)-12008 and 12214. Mr. A. J. WALSH, Commissioner, Emergency Procurement Service, General Services Administration, Washington 25, D. C. DEAR MR. WALSH: Your letter of April 7, 1955, proposes: (a) to cancel your letter order of March 11, 1955, (b) to amend your letter order of December 13, 1954, and (c) to provide for the sale to nonintegrated users of 41,120,000 pounds more aluminum than we had planned to sell them as of April 7, 1955. As you know, article III (b) of these basic contracts requires us to sell to nonintegrated users the amount by which the Government's "call" plus certain military requirements fails to equal two-thirds of the amount produced at the contract facilities. The remaining one-third may be disposed of as Reynolds sees fit. For over a year now, the stockpile "calls" have been so heavy that had we adhered strictly to the terms of the contracts and shipped nonintegrated users only the amounts provided in the contracts, our sales to them would have been so negligible as to be almost zero. Reynolds policy, however, has been to sell to nonintegrated users aluminum far in excess of quantities required by the contracts, and limited only by our commitments of metal in pig form to the stockpile and in the form of mill products to our other customers. We have made quarterly reports to your agency ever since the end of the controlled materials plan regarding such sales, and the information showing sales greatly in excess of required quantities over a fairly long period is in your agency's files. For your current information, we are enclosing a tabulation showing actual figures for January, February, and March of 1955 and estimates for the next succeeding 5 months of 1955 of production from Reynolds' contract facilities, shipments to the stockpile, shipments to nonintegrated users, the total of such shipments to stockpile and nonintegrated users, and the percentage that such combined shipments to stockpile and nonintegrated users is of total production from the contract facilities. The total of planned sales to nonintegrated users during this period is 104,460,513 pounds or approximately 54,022,980 pounds more than the contracts require us to sell them, even without taking into account certain current military requirements, which would tend to increase this excess. During this same 8-month period in 1954 we were able to persuade nonintegrated users to buy from us only 76.6 million pounds, so that this year sales are more than onethird greater than last year. These planned shipments to nonintegrated users, April through August, have been substantially increased as a result of Dr. Fleming's action in cutting the stockpile "take" for the first 2 quarters of this year, and our plans in this respect were made within a day or two of Dr. Fleming's action, and prior to receipt of your letter. They were not, however, increased by 41,120,000 pounds because we have commitments to other customers besides the nonintegrated users whom we must treat as fairly in connection with additional quantities of metal available to us as we treated the nonintegrated users during the periods when stockpile "calls" were much higher than they are at present. I think you will agree that it would not be appropriate for us to add to our sales to nonintegrated users the amount you suggest in your letter, and I sincerely doubt that you would have made the suggestion to us had you been fully aware of the facts as hereinabove outlined. What might be quite appropriate for another company, we feel if applied to Reynolds Metals Co's. situation, would work a great hardship on our mill product customers and, therefore, we must decline to accept the first paragraph on page 2 of your yetter of April 7, 1955. Accordingly, I am executing this letter on behalf of Reynolds Metals Co. with the above-mentioned paragraph stricken. Commissioner, Emergency Procurement Service, General Services Administration, Washington 25, D. C. DEAR MR. WALSH: We are returning herewith your letter of April 7, 1955, in which you propose that your purchase order of March 11, 1955, be canceled and that in lieu thereof your purchase order of December 3, 1954, be amended. This letter is being returned without acceptance by our company because we are unable to agree to the conditions outlined in the first paragraph on page 2 of the letter. The paragraph to which we refer would require that a quantity of 53,700,000 pounds of primary aluminum pig or ingot be made available to nonintegrated users from the date of the letter through the delivery term covered by the abovementioned purchase orders. We believe that the diversion of this metal from the stockpile to nonintegrated users should take place during the entire period covered by the above-mentioned purchase orders. We therefore propose that the first paragraph of page 2 of your letter of April 7 be stricken and the following paragraph be substituted in its place: "It is understood that in accordance with the provisions of the expansion contracts, the 53,700,000 pounds of primary aluminum pig, which has been reduced from the Government's calls of December 3, 1954, and March 11, 1955, will be delivered to nonintegrated users during the same production period as is covered by this purchase order. You also agree to furnish the Government, on or before May 15, 1955, a report showing the extent of compliance with the terms of this paragraph to that date." All other matters covered by your letter of April 7, 1955, except the first paragraph of page 2, are acceptable to us. We will be pleased to execute acceptance of the new letter as outlined above. Very truly yours, KAISER ALUMINUM & CHEMICAL CORP., Manager, Washington Office. KAISER ALUMINUM & CHEMICAL CORP., Mr. A. J. WALSH, Commissioner, Emergency Procurement Service, General Services Administration, Washington 25, D. C. DEAR MR. WALSH: In reply to your letter of May 13, 1955, we wish to advise you that we have sold and are selling to nonintegrated users during the first 2 quarters of 1955 the 53,700,000 pounds of primary aluminum (the amount of reduction in proposed stockpile calls) over the amount that we would otherwise have been obligated under our Government supply contracts to deliver had the stockpile reduction not been made, and we are willing to agree to do so, but your letter agreement of April 7 would obligate use to sell to nonintegrated users 53,700,000 pounds of metal over and above the amount we were already committed to deliver as of April 7. As early as February consideration was given to the reduction in both the first and second stockpile calls and we were advised on March 1 that the second quarter call would be 17,920,000 pounds less than originally proposed. This reduction was officially confirmed on March 11, but the amount of the reduction is included in the amount of reduction specified in your letter of April 7. On March 25 we were advised of the further reduction of 35,789,000 pounds in stockpile calls specified in your April 7 letter. In order to meet the pressing demands of nonintegrated producers, this company early in 1955 anticipated the stockpile reductions specified in your letter of April 7 and, as a result, by April 7 had already committed the delivery to nonintegrated users of the greater part of the 53,700,000 pounds made available by the reduction. Since by April 7 we had already committed the delivery of this metal to nonintegrated users, your letter agreement would require us to sell the amount of metal made available by the stockpile reduction twice. We believe the matter can be easily rectified, however, by a correction to the next to the last paragraph of your letter of April 7 and with this correction we are willing to sign the letter. This correction would be as follows: "It is agreed that you will make available to nonintegrated users as defined in article III-(b) (1) of the above contracts and under the same terms and conditions as are contained in article XI (a) of contracts GS-OOP-(D)-12192 and 12213 and in article XI (a) of contracts GS-OOP-(D)-12006 and 12143, a quantity of 53,700,000 pounds of primary aluminum pig or ingot over and above the total amount of such pig or ingot which you would be obligated under said contracts to deliver to nonintegrated users during the first and second quarters of 1955 had said reduction not been made. The delivery of said quantity of 53,700,000 pounds to said nonintegrated users shall be made during the same period as required by purchase order of December 3, 1954, as amended, for deliveries thereunder. You also agree to furnish the Government, on or before May 15, 1955. a report showing the extent of compliance with the terms of this paragraph to that date." A press release announcing the reduction in stockpile calls was issued by the Government on March 24, 1955. To date, however, we have no official agreement reducing our stockpile calls and accordingly, between the stockpile calls and our commitments to nonintegrated users, we are overcommitted by 53,700,000 pounds. We cannot continue to remain in this overcommitted position and unless some action is immediately taken to officially adjust the stockpile call we will be forced to advise our pig, ingot, and billet customers that the stockpile reduction has not been made and that we will have to reduce our deliveries to these customers by the amount mentioned. DEAR MR. WALSH: During the conference in your office this afternoon between you and Messrs. Elliott, Harding, and Holland representing General Services Administration and Emergency Procurement Service, Messrs. Humphreys and Cutler representing Kaiser, and Mr. Houghton and me representing Reynolds, the representatives of Kaiser presented to you a letter dated May 18, 1955, suggesting on page 2 thereof language which could be used in substitution for the next to the last paragraph of your letter of April 7, 1955, to them. We conclude that this language as so set forth would be satisfactory to us with, of course, appropriate changes in contract descriptions, change of poundage from 53,700,000 to 41,120,000 in two instances and the date of purchase order from December 3, 1954, to December 13, 1954. Ever since the end of CMP in making a quarterly report to your office of our sales of pig and ingot to nonintegrated users, we have consistently prorated the military setaside applicable to us between our precontract productive capacity and the productive capacity covered by the expansion contracts, but as far as I know this proration has not affected the amounts of pig and ingot that we have sold to nonintegrated users since in every quarter we have far exceeded the requirements of the contract. With best wishes, I am Yours very truly, MAXWELL CASKIE, Assistant Vice President. Mr. A. J. WALSH, KAISER ALUMINUM & CHEMICAL CORP., Commissioner, Emergency Procurement Service, General Services Administration, DEAR MR. WALSH: Please refer to our letter dated May 18, 1955, and the conference held in your office on that date concerning the proposed terms and conditions for a reduction of the Government's stockpile call under our various supply contracts for the first two calendar quarters of 1955. We advised you what our obligation to nonintegrated users would have been under the Government's original stockpile calls, before the reductions already made and now proposed, and what our obligation to nonintegrated users would be on the basis of the proposed reduction in the stockpile call. These figures were based on two-thirds of our entire production at the additional facilities, without any reduction for military setasides. You asked us to submit an alternative calculation making an appropriate reduction for military setasides, pro portionate to the production of our additional facilities, as compared to our total production. The figures on both bases are shown on the attached sheet. These figures may be summarized as follows: (a) Without reduction for setasides: Obligation to nonintegrated users under original stockpile Obligation to nonintegrated users after proposed reduction (b) With reduction for military setasides: Obligation to nonintegrated users under original stockpile Obligation to nonintegrated users after proposed reduction Pounds 16,550,000 70, 250,000 3,725, 727 57, 425, 727 In fact, we will deliver more than 104 million pounds to nonintegrated users during the first 6 months of 1955. This is more than 34 million pounds in excess of our contract obligation, without reduction of our obligation for military setasides, even after full effect is given to the 53,700,000-pound reduction in our stockpile call. We would also like to confirm, as agreed at our meeting, that the intent of the proposal set forth in our letter of May 18, 1955, is that we will obligate ourselves to make available to nonintegrated users 53,700,000 pounds of primary aluminmu, pig, ingot, or billet, over and above the total amount of such pig or ingot or billet which we would have been obligated under said contracts to deliver to nonintegrated users during the first and second quarters of 1955 if the original stockpile call for the first two quarters had been 53,700,000 pounds higher than the reduced call now proposed for the first two quarters. Very truly yours, Attachment. WARD C. HUMPHREYS, Manager, Washington Office. KAISER ALUMINUM & CHEMICAL CORP. Calculation of obligation to nonintegrated users under supply contracts New production.. Deduct new facility share of military set-aside, 57 percent of 33,813,000. Total. Two-thirds Original Government call. Remainder for nonintegrated users. Reduced Government call. Remainder for nonintegrated users. Mr. YATES. Will you repeat that statement? Mr. ELLIOTT. I say, that is a request that went beyond the obligation under the expansion contract. Mr. YATES. You mean your right is only to tell them that you don't want a particular shipment, and it is up to them then how to decide how they will distribute it themselves; is that what you mean? Mr. ELLIOTT. No; I didn't mean to say that. What I mean is that we were then asking them to make available as a result of that moreat least in legal theory-more than they would have been obligated on an initial call applying the two-thirds rule. Mr. YATES. How do you arrive at that conclusion, Mr. Elliott? Mr. ELLIOTT. We arrive at it in this way, sir. We take the amount of production-and I believe all companies compute it this way |