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093222 1 (1971-03-12)

handle is hein.gao/gaobacxbq0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE ROOM 7068 FEDERAL BUILDING 300 NORTH LOS ANGELES STREET Los ANGELES, CALIFORNIA 90012 MAR1 2 1971 Rear Admiral T. J. Walker Commanding Officer Naval Air Systems Command Navy Department Washington, D. C. 20360 Dear Admiral Walker: We recently completed a survey of the pricing of negotiated defense contracts at Douglas Aircraft Company, a division of McDonnell Douglas Corporation, Long Beach, California. The objective of our survey was to review the procurement process and determine the extent of compliance by contractor and Government personnel with the require- ments of Public Law 87-653 and the implementing provisions of the Armed Services Procurement Regulation (ASPR). During our work, we noted certain matters concerning the use of basic ordering agreements (BOA's) and the timeliness of price negotiations which we are pre- senting for your consideration and any action you may deem appropriate. Included in our survey were several orders over $100,000 awarded to Douglas during the period July 1, 1968, to November 30, 1970, under BOA's N00019-69-A-0011 and N00019-70-A-0004. Considerable delays were experienced in the procurement process for these orders. For example, an average of 9 months elapsed between the order issue and proposal submission dates; also, an average of 13 months elapsed between the order issue and negotiation dates. The major factor contributing to the time lags appears to be the utilization of firm fixed-price orders to procure A-4 aircraft modifi- cation kits which require considerable developmental effort. Due to the substantial engineering and developmental effort required, the contractor deferred the submission of cost proposals to the Government until this effort was essentially complete and a more sound basis existed for estimating production costs. This delay along with the time required to evaluate and negotiate the cost proposals resulted in many of these orders being negotiated after a substantial portion of the total effort had been completed. 50TH ANNIVERSARY 1921-1971 -

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