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PSAD-79-84 1 (1979-06-13)

handle is hein.gao/gaobaazje0001 and id is 1 raw text is: l~O76J I UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 PROCUREMENT AND SYSTEMS ACQUISITION DIVISION B-168450 109631 JUNE 13, 1979 The Honorable Harold Brown The Secretary of Defense Attention: Assistant for Audit Reports Room 3A336 ASD (Comptroller) Dear Mr. Secretary: We reviewed the pricing of Navy contracts N90019-72-C-0592 and N00019-73-C-0333, awarded to Pratt & Whitney Aircraft of West Virginia, Inc., Bridgeport, West Virginia, for aircraft engines. These negotiated fixed-price contracts, awarded dur- ing 1972 and 1973 by the Naval Air Systems Command, were valued at $9,015,747 and $48,292,115, respectively. AC 00 Our effort was part of a nationwide review of the pric- ing of the Department of Defense's noncompetitive prime con- tracts. Individual contract reviews represent a part of our efforts to monitor the Department of Defense's adherence to prescribed laws, regulations, and procedures in negotiating noncompetitive contract prices. According to our reviewjwork performed at the West Virginia plant accounted for only about 20 'ercent of the incurred costs. The balance of the work,#as performed by Pratt & Whitney Aircraft of Canada, Ltd., Longueuil, Quebec, under.subcontracts. Because the subcontract cost was signif- icant, we wanted to know whether the subcontract work prices included in the prime contract were reasonable in relation to cost or pricing data available to the subcontractor at the times of price agreements between the prime contractor and the Navy.j/ The Defense Acquisition Regulation (DAR) requires, in accordance with Public Law 87-653, that with certain excep- tions, contractors submit cost or pricing data in support of proposed prices for noncompetitive contracts over $100,000. If the proposed price includes major subcontract items, the contractor must obtain the subcontractor's cost or pricing data and submit it to the contracting officer. The prime PSAD-79-84 _e e I/ .00(950432)

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