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DOCUMENT RESUM~E
04399 - [B3324553)
(Pricing of Modification to Air Force Contract with the Boeing
Company]. PSAD-78-42; B-168450. November 25, 1977. 3 pp. +
enclosure (19 pp.).
Report to Secretary, Department of Defense; by Jerome H.
Stolarow (for Richard V. Gutmann, Directo::, Procurement and
Systems Acquisition Div.).
Issue Area: Federal Procurement of Goods and Services:
Peasonableness of Prices Under negotiated Contracts and
Subcontracts (1904).
Contact: Procurement and Systems Acquisition Div.
Budget Function: National Defense: Department of Defense -
Procurement & Contracts (058).
Organizaticn Concerne4: Department of the Air Force: Electronic
Systems Div., Vanscop AFB, MA; Eoein Co., Seattle, WA; Cost
Accounting Stardards Board.
Authority: P.L. 87-653.
Modification POOIO, awarded by the Air Force's
Electronic Systems Division, is a fixed-price-incentive
successive target contract for the first production buy of
Airborne Warning and Control Systems and provides for the
production of six systems anC related training equipment,
aerospace ground equipment, and data at a target price of
$293,300,00. Findings/Conclusions: rhe initial target cot of
the modiEication was overst!ted by about $2.4 millin because
certa~n -'ost or pricing data the coptractor provided the Air
Force it. support of proposed costs w(e not accurate; complete,
and current. The overstatement will result in an estimated
$508,000 of excess cost to the Government. Also, the initial
target cost may require a reduction of about $1.7 million
because of the deferral and cancellation of the procurement of
certain aerospace ground -,:iprent and related data. -he Cost
Accounting Standards (CAS) Board agr.3ed that the modification
contract should have included the standard CAS clause which
would have required the contractor to follow certain uniform
costing accounting practices. Because this clause was omitted,
$1.3 million of potentially unallowable property tax cost was
not questioned during preaward audits of the contractor's
proposal. Recommendations: The Electronic Systems Division
shouli consider the information presented in this examination
and any additicnal information available to determine whether
the Government is entitled to a price adjustmert under
modification P00450. (Author/HTW)](ViewImageLocal?handle=hein.gao/gaobaawiz0001&div=1&collection=&method=preview&ext=.png&size=3)