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DOCUEENT RZSUR
05218 - (B05454621
(Review of Pricing of Navy Contract]. PSAD-78-82; 3-168450.
February 21. 1978. 3 pp. 4 enclosure (8 pp.).
Report to Secretary, Department of Defense; by R. W. Gutmann,
Director, Procurement and Systems Acquisition Div.
Issue Area: Federal Procurement of Goods ahd Services (1900);
Federal Procurement of Goods and Services: Reasonableness of
Prices Under Negotiated Contracts and Subcontracts (1904).
Contact: Procurement and Syst ms Acquisition Dit.
Budget Function: National Defense: Department o Defense -
Procurement 6 Contracts (058).
Orqanization Concerned: Department ol Defense: Assxstant
Secretary of Defense (Coptrolle..); Lockheed Shipbuilding
and Construction .o., Secttle, Wr
Congressional ,Ilevance: House Committee on Armed Skcvicev;
Senate Comittee on Armed Services.
A rev.ew tas conducted of the pricing of a Javy
contract awarded to Lockheed Shipbuilding and Construction Co.
for two submarine tenders and related itea. The contract was a
cost-plus-incentive-fae-type contract vit- a target price of
$252,920,319. The pricing previsions of the contract did not
fully protect tk, interests of the Government because they did
not encourage the contractor to contrcl costs during tho
performance of the contract. Unnecessary costs may uave bean
borne by the Government as a result. Although $16.2 Ilion cf
proposed costs uas not supported by cost or pricing data, the
contracting officer accepta, these costs in establishing a
target price. The officer did not explain his reasons for
allowing the unsupportod costs. In addition, the contract target
costs was overstated by about $437,000 because cost or pricing
data provided by the contractor were not current, complete, and
accurate. The Secretary of the Navy should provide a report
setting forth actions that will be taken to prevent similar
problems. The Navy should ass-re that incentive provisions
included in contracts continuously activate contractors to
minimize costs. (RRS)](ViewImageLocal?handle=hein.gao/gaobaawul0001&div=1&collection=&method=preview&ext=.png&size=3)