HIGH RATES OF PROFIT

Press, Volume LXXIX, Issue 23940, 6 May 1943, Page 6

HIGH RATES OF PROFIT

NAVAL CONSTRUCTION IN BRITAIN

AUDITOR-GENERAL’S REPORT

LONDON, May 4. A profit of more than 80 per cent, was made on the construction of one warship in Britain last year. This has been revealed by the Comptroller and Auditor-General (Sir Gilbert Apcott). In a report on the Navy Appropriation Account for the year ended April 31, 1942, he said that an investigation into the cost of building 32 warships, including a battleship, an aircraft-car-rier, cruisers, submarines, and smaller craft, showed that in the main high rates of profit on costs were recorded. Orders were placed on the basis of fixed prices but settlement was largely suspended during investigation by the Admiralty’s principal accountant. The results showed that the profit on other vessels ranged from slightly under 10 per cent, to the instance of 80 per cent, quoted. The report says: “Builders, with one exception, have, in view of the profits disclosed, accepted the Admiralty’s proposal that they should waive in favour of the State claims amounting to £2,250,000 for extras on 128 ships. A similar waiver will apply to a number of submarines.” The report added that one firm had claimed £1,500,000, of which £750.000 represented overcharge. The report expressed the hope that a substantial part of this amount would be recovered by the State. , . . As the result of one Admiralty investigation, a price quoted by a firm which had no detailed costing system was reduced by 35 per cent. “The investigation suggested that insufficient safeguards against excessive prices were provided,” says the report. “The safeguards proposed ,to control costs include, first, a special investigation at least twice a year at every repair yard, and, second, surprise visits' by officials wherever they are deemed necessary.”