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PLRD-83-49 1 (1983-03-08)

handle is hein.gao/gaobabmxe0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE ICC WASHINGTON, D.C. 20548 AND EADNESSDPVSICN0utid~the PROCUREMENT, LOGISTICS, ra9 .. ..... . AbD READINES DIVISION__ B-210718 RELEASED MARCH 8,1983 The Honorable Carl Levin Committee on Armed Services United States Senate 111111 121038 Dear Senator Levin: Subject: Followup on the December 1981 Dollar Threshold Change for Certified Cost or Pricing Data (GAO/PLRD-83-49) This report responds to your October 13, 1982, letter which sets forth questions and observations from a constituent cegarding a recent change in the Truth-In-Negotiations Act (Public Law 87- 653). The change in the act increased the threshold for the man- datory submission and certification of cost and pricing data for negotiated procurement from $100,000 to $500,000. Your constit- uent pointed out that: --Field reviews or audits of proposals in the S100,000 to $500,000 range have resulted in considerable savings, many times more than the cost of resources to achieve the savings. Thus, the practice of reviewing or auditing these proposals in this range should be continued. --The savings were realized even though (1) the contractor had full knowledge that certified data would have to be presented and (2) a full pricing review 4oiild have to be performed by the Department of Defense (DOD) auditors. Because the deterrent factor of certified data, defective pricing remedy, and audits will no longer be present, it is very likely that the proposals for contracts under $500,000 will become more inflated. --The Cost Accounting Standards has also been effective in reducing DOD acquisition costs. However, this program becomes almost useless when DOD has no cost or pricing data to examine. GAO opposed the threshold increase both in testimony before the House Committee on Government Operations on June 3, 1981, and in oir August 17, 1981, letter (see enc. I) to the Deputy Secre- tary of Defense for several of the same reasons advanced by your constituent. (942253)

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