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B-159724 1 (1973-06-20)

handle is hein.gao/gaobaadyk0001 and id is 1 raw text is: UNITED STATES GENEIAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 PROCUREMENT AND SYSTEMS ()9005 ACQUISITION DIVISION B-159724 JUN 2 0 1973 The Honorable The Secretary of Defense Attention: Assistant Secretary of Defense (Comptroller) Dear Mr. Secretary: We completed a selective examination of subcontract estimates included in prime contract prices negotiated on the basis of cost or pricing data submitted and certified as re- quired by Public Law 87-653, the Truth-In-Negotiations Act. Effective January 1, 1970, contracting officials were re- quired to have prime contractors who submit cost or pricing data with their proposals obtain cost or pricing data from prospective subcontractors in support of major subcontract estimates. We wanted to find out whether contracting offi- cials had required prime contractors (1) to support major subcontract estimates with subcontractor cost or pricing data, (2) to fully justify requests for exemption from the requirement to furnish such data, and (3) to make a cost analysis of subcontractors' proposals and to use this infor- mation in evaluating the reasonableness of subcontract esti- mates. We performed the examination at five procurement of- fices selected because they had awarded a significant number of high-value contracts during the first half of fiscal year 1972. We reviewed 61 subcontract estimates, valued at about $177 million, included in the prices of 30 prime contracts, valued at about $1.1 billion. The procurement offices re- sponsible for the awards and the prime contracts reviewed are identified in the enclosure to this report. In the majority of cases, contracting officers did not require the contractors to submit or identify supporting subcontractor cost or pricing data to the extent required by the Armed Services Procurement Regulation (ASPR). Other 7fO~i

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