The Army & Navy Way

Army & Navy procurement officers, not wanting to take the zip out of production, are almost as opposed to a statutory limit on war profits as businessmen are. Businessmen, not wanting to be unpopular or unpatriotic, are almost as eager to avoid excessive war profits as Congressmen are. So last week, while Congressmen reconsidered a bill to limit all war-contract profits to 10% or less, the Army & Navy quietly perfected a technique of profit control that businessmen could understand.

The Army & Navy way is to set up Price Adjustment boards, which keep tab on the books of all contractors. When a contractor's unit costs start down and his profits start up, one of the boards calls him in. Intelligent businessmen, many of whom are making more money than they intended or even hoped, usually welcome this invitation to renegotiate the contract at a lower price. If they don't, the board asks, in effect: How would you like to explain your profits to the Vinson or the Truman committee? Negotiation proceeds from there.

By examining $100 billions of war contracts this year, Army & Navy procurement men expect to make savings and recoveries of $500 millions. They have already got hard-cash results:

>Continental Motors agreed to make a cash refund and price adjustments which will save the Government $40,000,000 this year.

>Jack & Heinz of Cleveland, whose gaudy profits and bonus payments were recently put on exhibition by the Vinson committee, promised a cut of $9,250,000 on 1942 business, coughed up $600,000 cash.

>A big contractor now on the Army carpet is expected to come to an agreement which will save $50,000,000 this year.

>Hundreds of small contractors all over the U.S. are going to district procurement officers and voluntarily making profit and price adjustments.

The boards' philosophy is to nip both scandals and Congressional smears in the bud, since they are equally bad for morale. They frown on high salaries, countenance post-war reserves, provided they are not at the Government's expense. If contractors cooperate, board mouthpieces will defend them before any Congressional inquiry.

Last week an executive order gave powerful implementation to these Army-Navy methods. It instructed Army, Navy, Treasury, WPB, RFC and the Maritime Commission all to sleuth for unreasonable profits. Don Nelson of WPB will establish rules and policies governing a new system of running audits.

The railroads, according to an ODT survey, are already short of manpower. Seniority lists are "substantially exhausted," particularly of machinists, sheet-metal and electrical workers, telegraphers, towermen, dispatchers. One solution: hiring women.

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