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092941 1 (1971-03-19)

handle is hein.gao/gaobacwuz0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE 0q j ROOM 7068. FEDERAL BUILDING 300 NORTH LOS ANGELES STREET Los ANGELES, CALIFORNIA 90012 AIRMAIL MAR 19 81971 Rear Admiral J. A. Scott Commanding Officer l| i 111I U. S. Navy Ships Parts Control Center iIIlIlllllllllillIllll Mechanicsburg, Pennsylvania 17055 LM092941 Dear Admiral Scott: As part of our review of the negotiation of contract prices under the provisions of Public Law 87-653, we have examined into the price proposed and negotiated for firm fixed-price contract N00104-69-C-0092 awarded to Alcan Aluminum Corporation, Riverside, California, by the U. S. Navy Ships Parts Control Center (SPCC). The contract price was definitized on February 7, 1969, in the amount of $1,642,500 and provided for the contractor to furnish 45,000 Zuni Rocket Motors, 5.0 MKG 16 Mod 1. The contract price was subsequently increased to $2,447,000 to provide for 22,065 additional units. Our examination was primarily concerned with the reasonableness of the price negotiated in relation to cost or pricing data available at the date of contract negotiations and the adequacy of technical and audit evaluations of the contractor's cost proposal. We found that proposed labor costs were higher than indicated by cost information available at the date of contract negotiations by about $91,400, including applicable overhead and profit. Also, proposed tool maintenance costs were apparently understated, to a lesser extent, because the most current cost information was not considered in the pricing of this contract. The evaluations of the contractor's proposal by Government representatives were not performed in sufficient depth to determine whether the proposed contract price was based on the most current, complete, and accurate cost or pricing data. The details of our review are discussed below. BACKGROUND SPCC awarded letter contract -0092 to Alcan on October 2, 1968, for the production of 45,000 Zuni Rocket Motors. Alcan submitted a cost pro- posal on November 1, 1968, in the amount of $1,760,850. A revised proposal was submitted on December 12, 1968, to reflect more current labor and over- head bid rates. OTHI ANNIVERSARY 1921 .1971I

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