Periodic Pricing

From Colonel Albert J. Browning, onetime head of Chicago's United Wall Paper Corp., now head of the giant Purchases Division of the Army's Services of Supply, came last week a sense-making announcement. So far as possible, the Army will try to restore the profit incentive to its wartime contracts, so that manufacturers who cut costs will be duly rewarded.

Worst feature of most war procurement at present is that if a manufacturer has a fixed-fee contract, he gets a profit anyway. If he has a fixed-price contract, chances are that the Government will renegotiate his profits away if they get too big. Colonel Browning's solution is a system of "periodic pricing." Under this system the Army will continue to write long-term contracts, but will review their prices from time to time. In any given period, however, the manufacturer will be allowed to keep whatever profits he can make. Hence he will be encouraged to reduce costs, conserve both materials and manpower.

This file is automatically generated by a robot program, so reader's discretion is required.