Review of Bulova Watch Co., Inc. Proposal

Published by the Government Accountability Office on 1971-02-08.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                                             P.M./ ot'5$

                       UNITED STATES GENERAL ACCOUNTING OFFICE                                       .
                                           REGIONAL OFICE                                                          cc,
                                             2- FECEJIAL PLAXA
                                       NEw YORK, NUEW Y.7RK 1(07

                                                                                FPE        8 1971

   Ialor Cznezval Ervin M, (br'h'om Jr.                           #140
   Conrning tWttor                                          LA     i
   U.S. Amcy ihwdtionu (CnrAnd                          P
    Pover   Nlew Jersey    73V01
    Deatr Gtsrl CreW rn
        ', bay.  lv*tW i the April 1.7 196'3, prveo.id wubatttMd by Spln                                      iL0 vs*?
   awd Inatruuets Dtviwtoa, Buloyt Wateh Coue.iy, T.t . tb*'Z6S, Army
   Anmunttiou Prooursant am Supply Apmy (5PM1), OwiISet, fMi{if, for
   ?4524A$ ti.   OR tM basts of this prclsa14j #nmtiut fkAIOn&iwaO)233
    a avwaded rn April 26, 1963, for i., att11ioc tnsttw tt at tol pric.
   or ~O4Mvi
        lb. controot laolu&td a deftotim priclitg olaunw provfdhas for a
   rducttou in prioef tif price        se izweed by a optitotiat rwuat
   becune the aoatrncter futniuahd i woqlt. itlaniurats &r urounr.t
   cost or pricing &ats. Uytiastions au ra hMld on April .t, 1963, OM
   1W3uovwx wubmitted tbe reqwinod cost or priciiig e*rttcat, .wo
   April 25, 196d.

                   z            U1

       Th* ftiru fid price MgoUiteNd ta; abent $7C7t400 hIgpitw than It
   should hanr ben ttcaun ulova u.d iocetartt. cost Ltxorn4lto in
   preporing its provpal. This ancuat inmludas dirtot nrim!caalaring
   lobor pLus app    1.4o.bl orer*M, gptr3.16 kt w&dni trwjtmva eapean.,
   and profit (no .pp. I, II),

                                                   I                                  I

21\&C   {..,      -K   I>?' ;    it'       UJ;L> IS'f       ,    Qct J   /- I6- .
                                                                           jL         f.        C/       (7
                                          /1 4,/i,,
    Pt!1avu origdnsfy proposed 0,fl31 tsr watt piuati*larig lAbor intso
Ihip rae. \ae computed Jy epplyflu aotuaY. awrqn hoir]y labr rates to
the tamndard tie required to iski a fusm. Durln&k wuotiAtiPU an
Apr1l 17, 1968, Bulows iasonrfd thk. amott tq e1,1463., APM rep-
eeutmtitwe quettloa4 the Wdit cset bneuso W*i "stuid*t   bom should
be applUd to vtan&rN rat.. e4 etuil wn sbhould be c 1ylied to
Botufil rute." A watt onslfcttwasea Yabor knt of 4i..fl4U t
 Lpotited subject to ttlon NraIwdhaU * JuutIftcatttEax for its revised
    0% April 19, 1963& prior to the cut,r-et nwerd nad sbisitio of tbn
pricing orttfitotl DMlove tvIsed the raqnwted Jstiltatiwa.
              $its Ibor unit cost by 1.ttlag it. outv w B
Buloe Juutified                                            a prwvl
corntrwt, DLI1-173-M34(A), iWich tt adjustd! for . wsbiNqat fl
tInrsase. (Sc'. app. ut.) '2Hi,! m. hfonustlkt vea not uzattted Iv
Govsrnsnt partihcLml prior to tw Rturd of Us oewtrect.

     1e Dul3on oayutsticn we aiulnWdg  pinw it outaixod tawoOMrtsN
deta. Correct insfonrtimn vnui has u*kn a labor nwt ont or' $.11213
for units to be wanufctuwwd Wtaro t. ap ilwnuruve tat 4.15'3 Ar
unite,msnuhcturd thnasttoar. (sec app. 1rt)
    The prior eoutrnct, 04(A), at1ed for Aki;, Nswi lon muing
 LOhPAismill, and arming mJnntem . 'Ia mober of eqtvalaat fume roduofd
hpd to be oon,'uted to detrmnln unit oeatu. fldom did this by using
UtL seflng prices or the nrrndng msohut msad tWM fuse no follows

                                          sLIAt..        Atmst
Pus. 3es& anrming nchantim                 $.9            S7.778
Arming isohptsme                                         .,i
     huse                                                1Qa


Fuze%                          466,030                  .466l,0XX
FuAm Las arming wchilnit        Z3,3000     57.7MT      22.,290
Arming neohmanim             1,312,110         ,        ZiLM
     EquIvalnt N".                         1WAM              Ma
                                           _.    _e    ____._S
                                  h~i'                 I                           ,i    K

                It* u1e of' eUlK4 Afrioes vms ivmslid jvtse tkc Xsber oveq id oa
           the fwi. ccexvnlnts vains %iot to the pa. rattso as tiwr "nfltag prls.
           Dulovs1 * lator nt'nd'rte ohovb tbet lbor wultmw¶ 1w thn sndsg
           Maohanntnvtww tuto that ntac.cd for )uth Lua loon astiig 1uhcniwtu Ai1

           Fus 1eJ
                le~rua \maounir
                             Z¢'1'g                              )         .41L6          33.152
           Arming meclmnipms

               Using 'ht stow standards tie %wqltvutat WU
                                                        i                                        lt.       ld ha^w 1*a
           -iowuted le (a(Alos

                                                                       t'.otval                                  M

           ftin                                                        466,Ovo                                 466, 00
           Fun iens arnigwsata                                    383,34                     M152              127,(t3
           Arinug mechanism                                         ,li,1C
                                                                1030,180                                             I)cbm
                        lqutvelet h L                                                                            L
                     I)*  in    ;flokirosewt                                     lM 4 8 4lD2 8 2 stptttlnaty dmves
           the hbtorinl lsbor wnit ooatWo

               W dlumand tztu astter vtth offietals on          Yert 3.w   Ot14.W,
           Delumu Qoutrnat Avwdtt Apmsy, and APSA ottfelaCs taludiag Th Dolwty
           cwd*, Prnamt Mvintt,                        ait Uw pnrmmeaat ttreoqUag
                                                                t .fierm.
            Thay egrnd, that ben   taU Satmta ws Nr.atdpw, twze a.
           d4fntiw prioln -a the nbjnt eomttrtt i Aih lk'* kd a *ut
           uwdorrw of abt $1#230,000.
                s ncand Utst the cutrvntiug ofttlonr enratn the O awmmt'
           right te t wloe adjustmnt undr Ut deffattw prilag .1Uw tot tM
           ccutrmct. 1A al"
                          so vug   that proonm~t oftilttln stop iwptiattW 4 r
           prk'nb tofors adqut. umly"s of ovcroctor ftwa ieud data Rr perrcvrn.

If.'''-'   S'-' ' 8*.r'.s
           Y                I'.
                            *,     -,     x    *   t        - *2 - I
                                                           '.          A     -               *         4                     -
   P1ines   %dvtu Us Vithik (60 daysO MAY mo t1icM take or plarmd.
   & oopy of tis letter In being forardd to Us Dtmnotor, DN.
Contrsct Audit Aomty.
                                            Stinr.1y yvuvh,

                                           Al~omm J. .S1trassulo
                                           Regluol Maaspr
cc; Director, QESS                                                   I
I~   ~ ~~      ~    ~~~~~~~I

Eonse direct mufacturiag labor          f30O)632.00
  (MO app. II)
Owrbsd (100A) aflond in m>gtoi atto s
            Dubtotal                    A24s0
Qbrerml Pad SKtn trstitlw ezpans
  (5.9%) mflnsd In ngottattou             35
             utotal                         .092
FroNt (10,) *1loud in negottatiose       lims
                                                                          V   a

               COnPUIATILW01 Fhgc=   .SMILIUMIQJ

                              Prior to         After
                               ftb   1a 1,%2   F21    Is    :     h9

rapttatxd tmt~ctrbg
  labor cots                    $1.3144         4.31444
Aotual experLuaod couts,
  adjusted fto wp
  inbrngn ¶ste ap. IIIl)
                   ill)                        4.sXrL
Differowc                                        A.&L%
Number of im11a'                                Ac90
Enus   labor costs           Z.akfla.
                                                       __       h51a251
                    CWPUAIIfS OF UNMI IAUOHIG

Thiglrt' Abril 19& 196W. letter
  Actual labor lucwling tooling                           41,68l,246.73
  Ovwrtdn pnitdua                                                ,112.76


Imnuteeturlng ooet. pr unit                                          14915
Addl 4.9% wap mawe                                                      Q
Projected uilt want

Actua labor pote reoided in ontrmotors
  roods - witout onrtims premium
1967 awafXotudng lbor                 4 513,916.85
     2-.ling                                      T9x.4   * 7nn4.34
196S )mnufecturttg lator                   1,050O,98.96
     Tooling                                  5afe8.1

     Jotfl labor luoluding tooling                        $1,672,8n.lr
     Lass tooling                                            1
     Total                                                    p     0905'4
Adds Wag     inorenws to 2/1/69                                   8I.sSA.6A
lotr]. projected cost

Equiulent uuite                                                   1s42.252

 'anufroturlng labor cost per unit to

Vanufrcturing labor soot per unit after
 2/69 (4.1% ibres. effotiye 2/3/69)                       1        LS47l

"Part of factory omehmda
bProvifd~for sepnrstljy La prine
cContreotar oould not explain why be reported $8,335.55
 in excu of book!d moete.