(1)
A
These several alternatives, but more especially the ceiling
price, have in common a method in the treatment of escalation
which should be illustrated separately.
This stems from
the fact that we are now at what appears to be the peak of a
period of unprecedented general inflation and price
instability..
The judgement is generally accepted that the
more extreme variations should diminish in the near term and
be followed by a tendency towards stabilization,
However,
when confronted with the need to put forward a bid figure, and
having no resources other than normal industrial resources,
we are forced to take account of possibilities, however remote,
rather than of probabilities. Thus, in order to avoid
assuming a continued accretion of annual rate of increase of
costs and prices at inordinately high levels (with the
resulting unreasonable increase in the ceiling price) we have
used rates similar to those experienced during the last two
years (themselves much higher than anything previously
experienced and which we feel cannot long continue to occur) and
propose that any annual excess if the actual increases above
these levels during the period of the contract's execution be
treated as an event of force majeure and its cost consequences
paid outside the limitations of the ceiling. The specific
rates assumed are separately mentioned in the description.of
each alternative offered.
Alternative One
In connection with this alternative we now bid a ceiling price
of HKS (
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