MUNITIONS CONTRACT

Dominion, Volume 36, Issue 310, 25 September 1943, Page 6

MUNITIONS CONTRACT

Minister Replies To Company

EXAMINATION OF RECORDS

“There is nothing in the company s reply to my previous statement which in any way detracts from the unsatisfactory nature of the company s attitude in regard to costs and profits on munitions contracts,” said the Minister of Supply and Munitions, Mr. Sullivan, last night, in a statement on the matters in dispute with the Precision Engineering Co., Ltd., of Wellington. “There are, however, sev’eral statements so wide of the mark that I must correct them,” he added. , “The company’s reply states that no interviews were asked for by us. Ibe manager of the company certainly asked for interviews with myself on several occasions and these were granted. ther the company formally asked for the interviews with 'War, Cabinet and 'Mr. Nash is beside the point—the interviews were arranged so that the company could state its case to the War Cabinet when negotiations with departmental officers had failed. The company was urged to agree to the matters in dispute being submitted to arbitration,< but this has been consistently refused by the company. “The company further states that it did not threaten to sue the Crown for further payment. I maintain that this threat was made verbally on several occasions, that it was made in writing by the solicitor of the company on March 26, 1943, and that on April 16, 1943, the company gave one month’s notice to Hie Crown of its intention to _fi_le a petition claiming payment of £11,574/18/5. “The company states that the Government’s accountants ‘have been supplied with or given access to every relevant document or record in connection with the contract they were cheeking. The Secretary of the Treasury advises me that up till December, 1942, the company consistently refused to allow examination of the accounting records, profit and loss accounts and balance-sheets. Without such information it is obviously impossible for any accountant to ascertain Hie overhead costs and to assess a fair and reasonable price for any contract. After lengthy negotiations'over a period of several months the company finally consented in December, 1942, to an officer of the Treasury having access to its accounting records for the period up to July, 1941. As. however, the contracts in question coveojd production up io December, 1942? an examination <-f accounting records up to that date was essential, and though requested has been, and still is, refused. “Concerning the offer made to Ireiioury on August 25,-1942, ‘to return to ’Treasury at the end of each finaui-uil year all profits in 'excess of its average net profit,’ I ahi advised by T’reastli’V that this offer was withdrawn within four weeks before agreement could be reached as to the method of assessment of cost, overhead and profit which, together with certain other details, had been Ilie basis of the long-standing dispute between the Government and this company. “I ant not going to enter into an argument in the Press on technical details of drawing, tolerances and specifications, l i reply to the allegations of departmental inefficiency in connexion with the priduetion of munitions, I would quote two prominent British engineers, appointed as advisers to the United Kingdom Government. who visited New Zealand early this year. This is what they stated to the Press at Auckland on April 3, IJ4o, before 'returning to England : — “‘During our short stay we have had some opportunity of seeing the progress that has been made during the iast two years in the production of munitions. We have been the successful development ot certain parts of New Zealand’s programme that were not even in the planning stage two years ago. Much of the production has, of necessity, bad to be by means of broken-down contracts. This is always difficult, requiring very careful planning and preparing, and we have been delighted to see how successfully this has been done.’ “The public will not overlook the fact that the engineers and accountant of the Munitions Department were sufficiently competent to save the taxpayers money to the extent of £4o,ooo'on Sten gun contracts, £lO.OOO on bomb tail contracts, and £15,000 on grenade contracts, these being reductions effected on prices actually quoted by this particular company To these amounts, we can also add'the cheque for £16,000 handed back to the Government oiit of the company's excess profits as the cheque was actually drawn at the time the investigating officer of the Treasury was examining those books of Hie company which he was allowed to see,” concluded Mr. Sullivan.

COMPANY’S STATEMENT Sten Gun Production The principal of the company, Mr. R. Burn, stated last night that his organization, as a private company dealing with a matter which was already within the jurisdiction of the Courts, was not in the same free position as the Minister to discuss publicly many of .the matters which had been raised subsequent to its action in forwarding to the Government a cheque for £16,032, which it had saved the taxpayers through its own efficiency. Were it not for the scope of the War Regulations, he said, the company would submit actual protographic evidence that the Minister was still being misinformed by departmental officers. The Sten gun it made and requoted on was not a twin to the gun on which the Minister so proudly claimed a saving of £40,000.