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Target cost contracts are growing in popularity but concerns remain about the interplay between fee, target, sharing ratios and the final price. This paper offers a fundamental analysis of the principles under‐pinning target contracts. It shows that there is scope for manipulation of tenders and that suboptimal methods of tender evaluation are in use. The paper analyses both fixed fee and percentage fee contracts. Methods of tender evaluation are proposed that will both reduce the scope for manipulation by tenderers and increase the likelihood of the contract being awarded to the tenderer whose final price will be the lowest. The analysis reveals a strong case for setting the contractor's share of cost overrun or underrun at a value that is not less than 50%. Finally, the paper proposes two simplifications that would reduce the number of variables in target cost contracts of the future. One is for the employer to set the fee and the other requires only that a target be tendered but with the fee built into it.

February 27, 1973 Industrial relations — Unfair industrial practice — Employee's resignation from trade union — Threat of industrial action by union against employers — Whether employee “person against whom the action was taken” — Whether competent to bring complaint against union — Industrial Relations Act, 1971 (c.72), ss.5(1)(2), 33(3), 101(1), 105(1).

This is the first comprehensive study that has appeared on consumption and rationing in the present war. All types of rationing and the experience of a very large number of countries are brought under review, on the basis of material collected by the Economic Intelligence Service of the League of Nations. Rationing and other measures of consumption control are enforced in order to ensure an equitable distribution of limited—and in many countries drastically curtailed—supplies of certain essential goods, such as foodstuffs, clothing and fuel. But they play a further very vital role in war economy, by reducing (or limiting) civilian demand in order to liberate maximum resources for war purposes and by making possible the control of prices. The volume opens with a discussion of this broad problem of consumption control in war economy, the various methods of rationing, the conditions under which they can operate successfully and the connection between rationing and price control. Particular attention is naturally devoted to food. In the second chapter tables are given showing, for some thirty countries, by categories of consumers and groups of foodstuffs, rations prevailing in the spring of 1942. As regards Europe, available evidence seems to show that diets are adequate in the United Kingdom, Denmark, Sweden and Switzerland, and not critically short in calories (though apparently deficient in animal proteins, fats, minerals and certain vitamins) in Germany, despite the substantial cut in the German rations which occurred in April, 1942. The situation in Italy and Spain is decidedly worse than in Germany. This is also true of the occupied countries, except Denmark. Not only are the legal rations lower, but those rations are frequently unobtainable in the shops; and even if obtainable, it is often doubtful whether full rations can be purchased by the poorest classes, prices having risen out of all proportion to the frozen wage‐rates. Diets in the Netherlands, Czechoslovakia and Norway are nutritionally poorer and more deficient in calories than in Germany. In France and Belgium, where the rations represent about 60 per cent. of the pre‐war calorie consumption, many of those who are unable to eke out their rations by purchases on the “ black market ” are living at the barest level of subsistence. In Finland the rations represent about 55 per cent., in Poland (General‐Government) less than 50 per cent. of the pre‐war calorie consumption. In the latter country, in parts of Yugoslavia, and above all in Greece, there is famine. To meet differences in individual needs, two distinct systems have been evolved. In Germany, where about 90 per cent. of food consumption is rationed, rations are differentiated according to kinds of foods and classes of consumers—the latter being divided into categories by occupations (heavy worker, very heavy worker, light worker) and by sex, age, etc. The rations of bread, fat and meat of “ very heavy workers,” for example, are between two and three times as large as those of normal consumers. The German system, which has been generally applied in the occupied countries, is rigid and leaves a minimum of free consumers' choice. The British system is far more flexible. Bread and potatoes are free, thus permitting everyone to obtain an unlimited number of calories, while restaurant and canteen meals are supplementary to the individual's basic ration. Special needs are met by the allocation of extra rations to canteens catering to industrial workers, by the extension of free school meals, and by “ distribution schemes ” giving children, mothers and sick people first claim on available supplies of protective foods such as milk and fruit‐juice. Flexibility is also maintained by the group rationing of canned goods. According to this system each item within the group is valued in points and the consumer may buy whatever he desires up to a given total point value. It is considered of great importance that all, irrespective of income, should be able to obtain their quota of essential foods. Among the measures introduced for this purpose are the far‐reaching subsidies to keep down prices. Many aspects of the British system are naturally to be found elsewhere: for example, the subsidisation of staple foods is practised in Sweden and certain other European countries; Germany distributes free vitamin preparations to school children; canteen and school feeding is common in Germany and many of the occupied areas, though for these meals ration cards have, as a rule, to be given up. In the case of food, there are definite limits to the amount by which consumption can be reduced without endangering health and life; in the case of most, though not all, consumers' goods, there are no such obvious limits and, in fact, the consumption of such goods has been drastically curtailed. Available information on the subject is given in the third chapter. The group rationing system just mentioned has been universally applied in the case of clothing. But in Germany, most of the occupied areas and Italy, rationing lias been supplemented by a system of special permits, without which no purchase of certain articles of clothing can be made. By the first half of 1941, purchases of clothing in Germany had been reduced by some 50 per cent. from the pre‐war level. The clothes rationing introduced in the United Kingdom in June, 1941, led to a decrease of about 30 per cent. in the volume of sales in the second half of that year compared with the same period of 1940. Fuel, electric current, soap, and other articles of household consumption are subject to restrictions of varying degrees of severity; the production of luxury goods has been restricted or stopped, while such limited quantities as may reach the market are subject to drastically increased taxation; the production of most durable consumers' goods— refrigerators, household furniture, pianos, etc.—has likewise been stopped. The last chapter contains a brief analysis of the effects which war‐time restrictions have had on the aggregate volume of consumption in various countries. Consumption has been heavily reduced in all European countries and in Japan; in the United States, Canada, Australia and certain other countries it appears to have increased up to the latter part of 1941. In the United Kingdom the reduction in consumption provided about one‐third of the total domestic resources absorbed in the war effort in 1941. The requirements of war production have also been met to a considerable extent by the consumption of capital. Germany, in particular, has had to resort to capital consumption on a large scale, in spite of a curtailment of private consumption by some 25 to 30 per cent. In reviewing the whole body of evidence, especially concerning food rationing, it is observed that the rationing systems which have been developed are “ more than a mere method of restricting individual consumption. They aim in fact at securing a minimum diet for the population as a whole and, in spite of the necessary limitations imposed by the war‐time scarcity, they contain the elements of a distributive system in which consumption is guided not so much by individual purchasing power as by human wants.”