viously mentioned the correct total is 153,458 (Tr. 1037, 1038; p. 5, Exh. 129). To this total was applied labor costs of $2.024 per man-hour, computed by dividing total productive man-hours of 1,097,667 into the total payroll including payroll taxes and insurance of $2,221,728.198 Next Cen-Vi-Ro applied three so-called "adders" to the allegedly excess man-hours: $.57 per man-hour representing 25 percent of equipment and plant support costs which were determined to be $2.29 per manhour, small tools and supplies at $.24 per man-hour and indirect job costs of $.87 per man-hour, resulting in a total as corrected of $568,408 (Tr. 1038; p. 5, Exh. 129). Equipment and plant support costs of $2.29 per man-hour were computed by dividing the total for such costs, $2,508,480, by total manhours of 1,097,667 (Exh. 5M, p. F8). Original investment in the north plant is stated to be $1,485,819 and in the south plant as $1,040,627.199 Depreciation based on a 15-year plant life for a normal 40- to 50hour week utilizing the double declining balance method and adding 50 percent for a 2-shift operation was computed at $540,408 for the north plant and $266,189 for the 19 Tr. 1038, 1039, 1052-1054; Exh. 5M, pp. F5 and F7. The Government calculated total man-hours at 1,005,425 based on submitted payrolls (Man-hour per Ton Study, Exh. 150). 199 Cen-Vi-Ro asserts that actual, audited plant construction costs are $1,563,007 for the north plant and $1,086,638 for the south plant (Brief, p. 48). These figures are allegedly $427,035 and $394,897, respectively, above the original estimates. south plant. Included in plant equipment and support costs is an item representing interest on investment at five percent for two years on the north plant ($148,582) and 114 years on the south plant ($65,039) for a total of $213,621. Mr. Karl Peterson, who principally prepared the claims, testified that costs stated were net job costs and did not include financing costs (Tr. 1027). We conclude that this item is not properly a cost. Other items under this heading include school and county taxes in the amount of $18,000, insurance [for equipment, Tr. 1060] of $22,199, spare parts including freight of $942,081 and electricity, gas, supplies and outside rentals for equipment operation totaling $505,982. Deducting the item for interest on investment, which we have determined is not a cost, the total for equipment and plant support costs is $2,294,859 which reduces man-hour costs in this category from $2.29 to $2.09. At 25 percent the adder for this factor is reduced from $.57 to $.52 per man-hour. Mr. Peterson conceded that the 25 percent was an arbitrary figure guided by experience in measuring support required for plant personnel (Tr. 1051). The next adder was $.24 per manhour for small tools and supplies (Exh. 5M, p. F9). Costs for small tools and supplies are totaled as $263,167 representing approximately 11.8 percent of payroll costs. Mr. Peterson testified that it was not appropriate to use a 25 percent February 7, 1973 factor in this instance since there was a direct relationship between such costs and labor (Tr. 1052). He denied that this factor was high by industry standards (Tr. 1057). The final adder is indirect job costs totaling $952,235 or $.87 per man-hour (Exh. 5M, p. F10). CenVi-Ro asserts that all supervisory costs and expenses incurred to support the operation were compared with all the recorded man-hours of labor to arrive at a unit cost (Exh. 5M, p. E2). Mr. Peterson testified that this account was charged with costs which did not appear to belong in other accounts and included items such as fidelity insurance, insurance on vehicles and the office, rent, clerical help, postage and certain supervisory salaries not otherwise included in direct labor costs (Tr. 1058-1060). While he denied that the job was charged directly with executive salaries, he was rather vague as to the supervisory salaries included in indirect job costs and stated that they "might be safety people." (Tr. 1059.) We think that the items comprising these costs could and should have been set forth with more precision.200 The contract provides that extra work and material are to be paid for at the actual necessary cost as determined by the contracting officer, plus an allowance, not to exceed 15 percent, for superintendence, general expense and profit.20 Mr. Peterson testified as to the reason for using the last 312 months of production as representative. He stated that it was simply an assessment of what Cen-Vi-Ro considered was the capacity of the plant when manufacturing standards had reached a point where they were generally understood (Tr. 986, 1040, 1041). It is clear that this aspect of the claim has been computed on the basis of man-hours per ton of pipe produced during a period when the plant was operating at or close to maximum efficiency as compared to a prior and less efficient period of production. This, in appropriate circumstances, could be a reasonable method of computing loss of efficiency. However, what is missing is persuasive evidence that the excess man-hours are in fact attributable to repairs and testing improperly required by the Bureau. We have sustained the appeal as to 699 special hydrostatic tests which we have concluded could not reasonably be required at Cen-ViRo's expense. It therefore becomes 201 Paragraph 7 entitled "Extras" of the General Conditions. Actual necessary cost is defined as including all reasonable expenditures for material, labor (including compensation insurance and social security taxes), and supplies furnished by the contractor, and a reasonable allowance for the use of his plant and equipment, where required, but will in no case include any allowance for office expenses, general superintendence, or other general expenses." See Perry & Wallace, Inc. v. United States, 192 Ct. Cl. 310 (1970), construing a very similar clause. 497-456-73- -8 necesary to determine the cost of clusive of indirect job costs, is then such tests. Mr. Franklin estimated the cost of hydrostatic tests as in excess of $200 per pipe (Tr. 341). Mr. Peterson testified that the cost of special hydrostatic tests in the south plant was $180 to $200 and near $300 in the north plant (Tr. 1028). We find that these estimates are overstated. Mr. Franklin testified that it took over three hours to perform a hydrostatic test (Tr. 346). This time includes handling the pipe on the test stand, coupling of the pipe with the test apparatus, a minor soak period of possibly 20 minutes and the actual test time of 20 minutes. It does not include time required to move the pipes from the yard and return. It therefore appears that the test time as stated by Mr. Franklin applies to the period after May 19, 1965, when the soak period was eliminated at Cen-Vi-Ro's option. The test equipment was such that ordinarily two pipes were tested at one time. Cen-Vi-Ro asserts that one test of two of the smaller pipes produced under DC-6130 could be completed in an average of 211⁄2 hours utilizing the services of one foreman, two laborers and a fork-lift operator (Exh. 81K, p. F-7). While we assume that more time would be required to conduct a test for the larger size pipe, it does not appear that any additional personnel would be involved. We conclude that a hydrostatic test under DC6000 involving two pipes could be completed in an average of four hours. The equitable adjustment, ex computed as follows: $2.784 (average man-hour payroll cost of $2.024 plus adders of $.52 and $.24) x 8 (four men at two hours per pipe) x 699 (number of excess tests) = $15,566.73.202 Indirect job costs will be considered in a separate portion of this opinion. Manufacture of Excess Rejects In computing this claim, Cen-ViRo subtracted total tons of pipe sold on DC-6000 (asserting 360,985, which includes 54- and 72-inch pipes produced in the north plant for DC6130) from tons of pipe produced (398,591, which again includes 54and 72-inch pipes manufactured for DC-6130), deducted a one percent reject rate allegedly anticipated in the bid and seeks to charge the Government with the remaining tonnage of 33,664 less a credit for repairs (Tr. 978, 983; Exh. 5M, p. F6). Based on total pipe production under both contracts of 447,499 tons and total man-hours of 1,097,667, Cen-Vi-Ro determined an average of 2.44 man-hours to produce a ton of pipe.203 Average man-hours to produce a ton of pipe were then 202 For comparison purposes, we note that Cen-Vi-Ro compated the cost of 381 allegedly excessive hydrostatic tests under DC-6130 at $7.038 (Exh. 81K. pp. F-7 and F-8). 203 P. 9, Answers to Interrogatories, Exh. 129. The Government determined total manhours at 1,005,425 and total pipe production as 433.970.9 tons for an average for both contracts of 2.317 man-hours per ton (ManHour per Ton Study, note 198, supra). The difference in man-hours is not explained. Since Cen-Vi-Ro alleges that all supervisory costs are included in indirect job costs, it does not appear to be due to the fact that submitted payrolls in accordance with the Davis-Bacon February 7, 1973 applied to the reject tonnage to reach a total of 82,140 manhours (Exh. 5M, p. F6). Labor at $2.024 per hour, plant and equipment support costs of $2.29, small tools of $.24 and indirect job costs of $.87 per man-hour were applied to the allegedly excess man-hours to reach a total of $445,528. This figure was reduced by $50,000 to account for the cost of repairs. If Cen-Vi-Ro's contention that approximately 50 percent of the 1,670 rejected pipes in the yard on June 20, 1966, was repairable in accordance with the Manual is accepted, this would result in an average repair cost of approximately $60 per pipe. However, Mr. Peterson stated that the $50,000 was an estimate on the order of $30 or $40 a joint, based on all joints (Tr. 1072). Since the foregoing is the claimed labor and associated plant and equipment costs applicable to the allegedly excess rejects and does not include material costs, we will defer our discussion on this aspect of the -claim pending consideration of material costs. Cost of Material in Excess Rejects claim, Cen-Vi-Ro determined an Act would not necessarily include foremen, and other supervisory employees. However, acceptance of the Government's figure in the absence of a change in total labor dollars would compel an upward revision in hourly labor costs. The difference in tonnage of pipes produced appears to be due to methods of computing average weight for each size and class of pipe (letter from Department counsel to counsel for Cen-Vi-Ro, dated July 30, 1970). Under the circumstances we accept Cen-Vi-Ro's figures. average content per ton of pipe for steel (cement, sand and coarse aggregate usage was determined on the basis of the average per ton of concrete), applied the resulting figures to the allegedly wrongfully rejected tonnage and added a five percent factor for waste (Exh. 5M, p. F11). Mr. Peterson testified that the standard mix and the associated materials were applied to the net weight of the concrete in the rejected tonnage and that required reinforcing steel was based on the average weight in each size and class of pipe produced (Tr. 1072, 1073; see also Explanation of Steps in Computing the Extent of Damages, Exh. 5M, pp. E2 and E3). Reinforcing steel was computed at an average of .0432 tons per ton of pipe which applied to the rejected tonnage of 33,664 equals 1,454 tons. This figure was multiplied by the asserted cost of $126.56 per ton which equals $184,018. Cement usage was computed as an average of .7621 barrels per ton of concrete. Tons of concrete in the rejected pipe were determined by subtracting 1,454 tons of reinforcing steel from 33,664 (tonnage of allegedly wrongfully rejected pipes) and applying the result (32,210) to the average barrels of cement per ton of concrete which equals 24,547 barrels. This figure multiplied by the asserted net cost per barrel of cement ($4) equals $98,188. Sand usage was computed at 2782 tons per ton of concrete which multiplied by 32,210 equals 8,961 tons. This figure times the asserted cost of $2.57 per ton equals $23,030. Coarse aggregate usage was determined as .5394 tons per ton of concrete which multiplied by 32,210 equals 17,374 tons. This figure multiplied by the asserted cost of $3.37 per ton equals $58,550. The total cost of the above materials equals $363,786 to which Cen-Vi-Ro applied a five percent waste factor to reach the amount claimed of $381,975. Mr. Peterson testified that the five percent waste factor was determined from CenVi-Ro records (apparently on other jobs) and the estimate (amount for waste not stated). He asserted that in many instances waste factors were actually higher (Tr. 1074). It is clear that in seeking to charge the Government for all rejected tonnage above the one percent anticipated in the estimate (Tr. 983), Cen-Vi-Ro has adopted a variation of the total cost approach.204 In this connection, we note that final rejects allocated to the months in which the pipes were produced, were less than one percent of production in only two months, 0.5 percent in February and 0.9 percent in April 1966 (Exh. 5Q). Mr. Peterson admitted to having agreed at a conference with Bureau representatives in January 1967, that a two percent rejection rate would probably have been more realistic (Tr. 1067). However, he defended the one percent estimate by asserting that licensee plants using the Cen 204 See, e.g., Bruno Law v. United States, 195 Ct. Cl. 370 (1971) (total time approach to proving delay is no more acceptable than total cost method of proving damages). Vi-Ro process had previously experienced rejection rates substantially less than one percent (Tr. 1068). He asserted that in view of the volume of production the fact that the plant was new and that personnel were to be trained should not affect the result. We note that Mr. Hubbard expressed the opinion that final rejects normally expected due to accidental damage and other factors should not exceed one-half of one percent (letter to Raymond International, Inc., dated July 2, 1965, Cen-Vi-Ro Correspondence). This statement was, of course, made over a year after the plant had commenced operations. Cen-Vi-Ro, relying on Mr. Peckworth's estimate, argues that only 50 percent of the pipes were properly rejected and asserts that of this quantity, the pipes rejected for flaking are due to the Bureau's actions in forcing Cen-Vi-Ro to deviate from its normal manufacturing procedure (Brief, p. 46). Cen-Vi-Ro computes an actual reject rate of approximately 12 percent. However, this computation assumes production of 60,000 pipes under both contracts (actual production appears to total 55,719, Exhs. 5Q and 81R), assumes final rejects of 3,000 (actually final rejects for both contracts appear to be 2,923), and final rejects for flaking of 600 while actual rejects for this reason (including rejects for bad interiors) are approximately 364 (352 in yard on June 20, 1966, plus 12 rejected under DC-6130). Accepting for the moment, Cen-Vi-Ro's assumptions that |