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093224 1 (1971-03-12)

handle is hein.gao/gaobacxbt0001 and id is 1 raw text is: 

DS

                  UNITED STATES GENERAL AccoUNTING  OFFICE
                              REGIONAL  OFFICE
                            ROOM 7068 FEDERAL BUILDING
                            300 NORTH LOS ANGELES STREET
                         Los ANGEL..ES, CALIFORNIA 90012


                                                      MAR 1 2 1971


    Mr. Edward Curtis
    Vice President, Contracts and Pricing
    Douglas Aircraft Company
    McDonnell Douglas Corporation
    3855 Lakewood Boulevard
    Long Beach, California  90801

    Dear Mr. Curtis:

         We recently completed a survey of the pricing of negotiated
    defense contracts at Douglas Aircraft Company, Long Beach, California.
    The objective of our survey was to determine the extent of compliance
    by contractor and Government personnel with the requirements of
    Public Law 87-653 and the implementing provisions of the Armed Services
    Procurement Regulation.

         Included in our survey were 25 firm fixed-price procurements over
    $100,000 awarded to Douglas during the period July 1, 1968, to
    November 30, 1970.  Based on the results of our work, we do not plan
    to perform any detailed examinations of the pricing of these procure-
    ments at this time.  Although the results of our survey were discussed
    with the Director, Military Contracts Division, and his staff, we
    thought it would be useful to summarize those issues which we believe
    warrant your attention.

    Need to  disclose current cost estimates
    prior  to contract negotiations

         We  noted that several orders under basic ordering agreements
     (BOA's) had not been negotiated until a substantial portion of the
     effort had been completed. This  occurred primarily on those A-4
     aircraft modification kit orders which required considerable develop-
     mental effort.  Due to the substantial engineering effort required,
     the contractor deferred the submission of cost proposals to the
     Government until this effort was substantially complete and a more


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