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B-132923 1 (1972-05-24)

handle is hein.gao/gaobaagks0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTI UI0WASHINGTON, D.C. 2054 4 , .I PROCUREMENT AND SYSTEMS ACQUISITION DIVISION MAY 4 1972 OCUMENT AVAUAR The Honorable The Secretary of Defense II/II111liIlI111li)111IIII 11 Attention: Assistant Secretary of Defense LM096558 (Comptroller) Dear Mr. Secretary: We examined progress payments made by the Department of the Army to the BeTTflflicopter Company, Fort Worth, Texas, during performance of Bell's fixed-price and fixed-price- P'./1779 incentive contracts for military helicopters. We examined also Bell's repoT---th--ompare paymeits_ with costs incurred plus profits for helicopters delivered under its incentive contracts. On June 30, 1971, Bell held defense contracts valued at about $1.8 billion. The U.S. Army Aviation Systems Command 3 (AVSCOM), St. Louis, Missouri, is responsible for the admin-- ?Y istration of these contracts, which is handled primarily by Army personnel located at the Bell plant--identified as Army Bell Plant Activity (ABPA) personnel. A resident staff of the Defense Contract Audit Agency (DCAA) is also stationed at the Bell plant. Our examination showed that Bell had received additional amounts as progress payments because it had (1) included in the cost of work in process estimated and anticipated costs rather than costs actually incurred and (2) understated costs applicable to delivered items for which it had already been paid the contract price. In addition, we found that Bell had retained payments for delivered items in excess of amounts provided by the contract. These additional payments will be offset as other costs are incurred or when the contracts are settled. In the in- terim, however, Bell has had interest-free use of Government funds. We did not compute the interest on the overpayments because the amounts varied from day to day as costs were in- curred. The amounts would be substantial, however, as indi- cated by the following specific examples.

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