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PSAD-80-3 1 (1979-10-18)

handle is hein.gao/gaobaazuu0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON. D.C. 20548 PROCURME NT AND SYSTtMS ACQUISITION DIVISION B-16F450 OCTOBER 18, 1979 The Honorable Harold Brown The Secretary of Defense Attention: Assistant for Audit Reports Room 3A336 ASD (Comotroller) Dear Mr. Secretary: Subject: Opportunity to Reduce Cost of the Navy's Contract for Patrol Combatant Hydrofoil Missile Ships (PSAD-80-3) In reviewing the oricing of contract N00024-77-C-2051, we found that the contract price was overstated by about $336,000 because it was based, in part, on the ceilinq price for a subcontract rather than the target onrice. We also found that the Navy will incur excess costs of about $624,000 because the contract reauirements were reduced without a cor- responding reduction in contract price. This fixed-price incentive contract was awarded in February 1977 by the Naval Sea Systems Command to the Boeinq Company of Seattle, Washincton, for the production of five natrol combatant hydrofoil missile shios. We oerformed this review as mart of our review of the Dricina of contracts awarded to major DOD contractors. Our cbjective was to de- termine the reasonableness of the contract orice in relation to cost or oricing data available to the contractor at the time of contract ,ego.,ations. Cur review was oerformed at the contractor's location, where we reviewed documents and discussed them with contrac- tor personnel. We also considered work done by the Defense Contract Audit Agency and the orocuremrent contracting office staff. 21 0492

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