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PSAD-79-47 1 (1979-03-19)

handle is hein.gao/gaobaayuz0001 and id is 1 raw text is: Io,sg UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 ENT ANO SVYTEMS ITION DIVISION MA B-168450 The Honorable Harold Brown The Secretary of Defense Attention: Assistant Secretary of Defense (Comptroller) Dear Mr-. Secretary: LRCH 19, 1979 108858 We have reviewed the pricing of subcontracts 11-20707 and ' ' 6(t,, 11-52781 awarded by the Grumman Aerospace Corporation to West- ern.Gear Corporation, Flight Structures Division, Jamestown, e*6/230 North Dakota. These firm-fixed-price subcontracts were for procuring 25 Lot VI and 40 Lot VII weapons rail system ship- s e~fr thr e F r4 aircraft, at negotiated prices of $4,050,000 and $7,400,000, respectively. Subsequent contract modifica- tions increased the prices to $4,363,563 and $8,016,840, re- spectively. These subcontracts were selected as part of a nationwide review of the pricing of negotiated noncompetitive subcontracts awarded under Department of Defense negotiated noncompetitive prime contracts. Our objective was to determine the reason- ableness of the subcontract prices in relation to cost or pricing data available to the subcontractor at the time of contract negotiations. uPublic Law 87-653 (Truth in Negotiations Act) requires that, with certain exceptions, contractors and their subcon- tractors be required to submit cost or pricing data to sup- port proposed prices for noncompetitive contracts and contract modifications expected to exceed $100,000. Also, contractors are required to certify at the time of negotiations that data submitted is current, complete, and accurate. A clause is in- serted in the contract which gives the Government a right to a price reduction if the price was increased because the data submitted was not in accordance with the certification. * (j1, (1 , PSAD-79-47 (950450) -I PROCURIEM ACQUIS

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