THE “TARGET” SYSTEM

Otago Daily Times, Issue 25301, 11 August 1943, Page 4

THE “TARGET” SYSTEM

ARMY HUT CONTRACTS (F.0.P.R.) WELLINGTON, Aug. 10. The system under which army huts had been constructed was explained by the Minister of Finance, Mr Nash, in the House of Representatives to-day during consideration of the Estimates. Opposition members had quoted from the Controller and Auditor-general’s report that investigations made by the Treasury and the Audit had resulted in savings of £30,000 on hut-building contracts. Mr Nash said that no contract had been entered' into for the building of huts. It was merely an arrangement under which huts were supplied at a cost of £6B 4s lid each. There was no clause in the agreement to reduce prices. After the Treasury and the Audit had looked into ■the position, the price was reduced to £63 2s 8d for huts in Auckland, £65 4s lid in Wellington, and £64 12s 7d for the South Island. It was the difference between the original agreed price and the reduced one that was mentioned in tire Auditor-general’s report. Mr F. Langstone (Govt., Waimarino) said he was unable to understand the high costs of the huts When he was Minister of Lands his department had supplied huts of approximately the same size, lined and with stoves, at about £2O each. He thought the experience of the department should have been utilised in connection with army huts. The Minister in charge of war expenditure, Mr Adam Hamilton, referring to the master-schedule and cost plus system of allocating war’ contracts, said there was also a “ target ” system. A; contract might, for example, be let tp build a ship for a “ target ’’ of £20,000. If the builder could do it for less he received a bonus, and if he went higher than the “ target" price he got nothing except his profit on £20,000 In the ordinary way.