No. EXHIBIT'S-Continued 11. Letter from Lowell K. Bridwell, Federal Highway Administrator, Department of Transportation, to Senator Walter F. Mondale, concerning prices of 1968 model cars, May 23, 1967 12. Letter from Senators Magnuson and Mondale to the presidents of the 13. Correspondence between Senators Magnuson and Mondale and 15. Documents submitted by Ralph Nader.. 16. Correspondence between the General Services Administration and 18. Examples of information auto companies refused to supply to the Bureau of Labor Statistics_ 131 19. Training and background of Bureau of Labor Statistics staff working on automobile prices -- 132 157 20. List of 1968 safety standard requirements submitted by General Motors 21. Letter from Edward C. Bateman, Chief, Division of Supply and Transportation Services, State Department, to Claude W. Adams, manager, Government sales, General Motors Corp- - - 22. Memorandum from the General Services Administration concerning 23. Memorandum from the Treasury Department regarding the applica- Association, Inc., to Senator Ribicoff concerning financing the con- 25. General Motors' expenditures related to safety, durability and reli- 162 161 166 198 28. Article from the Journal of Commerce, May 16, 1968, concerning U.S. auto imports - - - - 27. Article from the New York Times, March 26, 1968, concerning 1969 model cars_ 204 210 29. Estimated cost per unit to insure compliance with Federal safety standards on Ford automobiles_ 30. Examples from Ford of test results recorded on various makes and 32. Material submitted by General Motors, Ford, Chrysler, and American 224 224 227 378 382 PRICES OF MOTOR VEHICLE SAFETY EQUIPMENT FRIDAY, FEBRUARY 2, 1968 U.S. SENATE, SUBCOMMITTEE ON EXECUTIVE REORGANIZATION, COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 3302, New Senate Office Building, Senator Abraham Ribicoff (chairman), presiding. Present: Senators Ribicoff and Hansen. Also present: Paul Danaceau, staff director; Robert Wager, general counsel; Pamela Gell, chief clerk; and E. F. Behrens, minority consultant. Senator RIBICOFF. The subcommittee will be in order. OPENING STATEMENT OF SENATOR RIBICOFF This morning we begin hearings on S. 2865, a bill to permit the Federal Government to obtain some very important information: How much it pays for automobile safety. This subcommittee has been deeply concerned about the price of safety standards since it first began hearings on the Federal role in traffic safety 3 years ago. As a result of those hearings-and our continuing interest in this area-we made three separate attempts through correspondence to obtain information relating to this matter. But on each occasion-once with the General Services Administration, once with the Bureau of Labor Statistics, and once with the automobile industry itself—this information was not forthcoming. Our first attempt occurred at the start of the traffic safety hearings. At the time, the General Services Administration had proposedand was in the process of working out-17 standards for vehicles purchased by the Federal Government. We asked GSA to tell us how much the Government would pay for these standards when they became effective on September 28, 1966. GSA replied that while it could tell us that a 1967 automobile cost the Government $46 more than a 1966 model, it could not determine how much of this was due to the safety features. INFORMATION SOUGHT HAS BEEN UNAVAILABLE We sought more basic data. In April of 1966, we asked the Bureau of Labor Statistics to tell us how it adjusts the consumer price index to reflect the changes in automobile models from year to year. We felt that if we could isolate the price of equipment we might gain an insight into the price of safety. But we were informed that the basic price data used by the BLS was provided by the the automobile manufacturers on a confidential basis and could not be revealed to anyone outside of the Bureau. Six months ago, we asked the automobile companies themselves to tell us how much the Government paid for each of the 17 safety standards. The presidents of the four major manufacturers replied that they could not furnish this information because (1) their bids to the Government were based on competitive factors, and (2) pricing was a complicated and complex matter in which the price of the parts often did not add up to the total price. It was our feeling-and still is-that such information as the GSA, the BLS, and the automobile manufacturers were unable to supply should be available both to the Federal Government and to the public at large. And that is why I introduced this legislation to require manufacturers to specify in their bids to the Federal Government the price of each individual safety standard. PURPOSES OF S. 2865 This bill is designed to serve two main purposes. First, it will help the Congress in its job of assuring that the taxpayers' money is wisely spent-a task that is important whether we are purchasing spacecraft or automobiles. Second, it will help shed some light on what private citizens are paying for automobile safety. It is very difficult to accept the explanation that the price of each item of safety equipment cannot be determined-especially in view of the automobile industry's demonstrated ability to specify other prices including one safety item, the shoulder belt. The consumer knows how much he pays for optional features such as map lights, remote control side view mirrors, power brakes, and power disc brakes. But-with only one exception-neither he nor the Government knows the price of the 20 standard items of automobile safety. Certainly the question of whether an item is standard or optional should not be an insurmountable barrier to providing the information we seek. In the past 4 months, the automobile industry has substantially increased the price of its 1968 models. While the industry has given many reasons for the price increase, no one really knows how much of this increase is due to the 20 safety standards that were effective on January 1 of this year. This lack of information has resulted in much confusion and misunderstanding which need not have occurred. In an attempt to correct this situation, we turn first to the departments and agencies of the Federal Government who have a responsi bility in this area. We must determine whether they are making satisfactory efforts to obtain and provide to the public and the rest of the Government information on the price of automobile safety. Some time ago, I said that the American people would be willing to pay for a safer car. By the same token, the American peopleand the Federal Government-would be willing to pay provided they knew specifically what they were paying for item by item. This bill seeks to make this information available. This hearing is a normal and natural outgrowth of a concern originally expressed by the automobile industry. When the proposal for a national highway safety program was being considered by the Congress, the automobile industry maintained that its costs should be considered when establishing individual safety standards. Now that the standards are effective, it is only fair that we give the purchaser the same consideration the industry requested for itself at an earlier time. Both the manufacturer and the consumer are entitled to know what they pay for each individual item of automobile safety. Manufacturers have the undisputed right to establish their own prices. Thus, we only seek to learn how much the Federal Government pays for 20 items of automobile safety specified by law. We hope that such information. can also be provided for the general public. At this point I will insert in the record a copy of S. 2865, and the correspondence the subcommittee has had with departments and agencies of Government and the automobile companies concerning this matter. EXHIBIT 1 [S. 2865, 90th Cong., second sess.] A BILL To amend the Federal Property and Administrative Services Act of 1949 to require the disclosure of the cost of items of safety equipment in the procurement of motor vehicles Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 302 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C, 252) is amended by adding at the end thereof the following new subsection: "(f) In any procurement by any executive agency of one or more motor vehicles in which there is to be included, in compliance with regulations promulgated by the Administrator, one or more items of motor vehicle safety equipment, disclosure of the unit price of each such item of equipment shall be required. If such procurement is made by advertisement for bids, each bid submitted in response thereto shall contain an itemized statement of the amount of such unit price for each such item of safety equipment which is included in the aggregate price tendered for the furnishing of such motor vehicle or motor vehicles. If such procurement is negotiated without advertising, each party who enters into negotiation to furnish such motor vehicle or motor vehicles to any executive agency shall furnish to such agency at the beginning of such negotiation a written statement containing itemized information as to the unit price for each such item of safety equipment which will be included by such party in the aggregate price which may be tendered by such party for the furnishing of such motor vehicle or motor vehicles. All information received by any executive agency (other than the General Services Administration), in the course of any procurement or negotiation for the procurement of one or more motor vehicles, concerning unit prices quoted for each item of such safety equipment shall be transmitted promptly to the Administrator under such regulations as he shall prescribe." EXHIBIT 2 [S. 2865, 90th Cong., second sess.] AMENDMENT (In the Nature of a Substitute) Intended to be proposed by Mr. HARRIS (for Mr. RIBICOFF) to S. 2865, a bill to amend the Federal Property and Administrative Services Act of 1949 to require the disclosure of the price of items of safety equipment in the procurement of motor vehicles, viz: Strike out all after the enacting clause and insert in lieu thereof the following: That section 302 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252) is amended by adding at the end thereof the following new subsection: "(f) In any procurement of motor vehicles by any executive agency, disclosure of the price of each system or item of equipment incorporated into the vehicle in order to comply with the safety standards set by the Secretary of Transportation pursuant to the National Traffic and Motor Vehicle Safety Act of 1966 (15 U.S.C. 1391 et seq.) shall be required. In accordance with such regulations as the Administrator of General Services shall prescribe, each bid or offer submitted in response to any solicitation for offers shall contain an itemized statement of the amount of such price for each such system or item of safety equipment which is included in the aggregate price tendered for the furnishing of such motor vehicles. All information received by any executive agency (other than the General Services Administration), in the course of any procurement of motor vehicles, concerning prices quoted for each system or item of such safety equipment shall be transmitted promptly to the Administrator under such regulations as he shall prescribe." EXHIBIT 3 APRIL 12, 1966. MR. WILLARD W. WIRTZ, Department of Labor, Washington, D.C. DEAR MR. SECRETARY: In recent testimony before the Senate Commerce Committee, Mr. John S. Bugas, Vice President of Ford Motor Company and Chairman of the Safety Administrative Committee of the Automobile Manufacturers Association, stated that from 1959 to 1965 (prior to the excise tax cut effective May 15), the Bureau of Labor Statistics index of retail new car prices declined 3.1 percent while the overall Consumer Price Index increased 8 percent. Included in Mr. Bugas' testimony was a chart comparing the Consumer Price Index New Car retail prices and car prices relative to the Consumer Price Index. The source of this chart was given as the Bureau of Labor Statistics. On this same subject, the February 1966 Monthly Labor Review contained a technical note entitled "Introductory Prices of 1966 Automobile Models." This article described in general terms the method by which the Bureau of Labor Statistics adjusts its price indices for quality differences when measuring price changes. This article raised two questions in my mind. In furtherance of the inquiry being conducted by my Subcommittee on Executive Reorganization into the Federal role in traffic safety, I would find it most helpful if you would furnish me with the following information: 1.) A list of all the quality differences considered by BLS on the 15 American car models mentioned in the article, or their predecessors, in the years 1959 to 1966; 2.) A detailed explanation of the computations and evaluations made by BLS in reaching its conclusions. Thank you for your cooperation in this important matter. Sincerely, ABRAHAM RIBICOFF, Chairman. |