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PLRD-83-93 1 (1983-07-07)

handle is hein.gao/gaobabnak0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION Major General Robert L. Moore, USA Commander, U.S. Army Missile Command Redstone Arsenal, Alabama 35898 121850 Dear General Moore: Subject: Contract Overpriced Because of Duplicate Labor Hours and Excessive Material Pricing Rates (GAO/PLRD-83-93) We have examined the pricing of contract DAAK40-78-C-0042 awarded to Litton Systems, Inc., Data Systems Division, Van Nuys, California, by the U.S. Army Missile Research and Development Command. This Command was consolidated with the Missile Materiel Readiness Command on July 1, 1979, to form the U.S. Army Missile Command. This fixed-price incentive contract provided for the production of nine AN/TSQ-73 Missile Minder Systems at a target price of $19,779,000. The review was made as a part of our continuing effort to examine the reasonableness of negotiated noncompetitive contract prices. Our objective was to determine whether the negotiated price of contract -0042 was based on current, complete, and accurate cost or pricing data available at the time of negotia- tions, as required by Public Law 87-653. We selected this contract for review because our survey indicated the contractor experienced a significant cost underrun under the contract and the Defense Contract Audit Agency (DCAA) had completed its defective pricing review of the contract. We made our review at the contractor's facility. We reviewed pertinent documents and held discussions with contractor personnel. We also reviewed field pricing work performed at Litton by the DCAA. In addition, we reviewed the contract pricing and negotiation files and held discussions with contracting personnel at the procuring agency. We discussed our findings and conclusions with both the contractor and the contracting officer. Their comments were considered in preparing this report. This review was made in accordance with generally accepted Government audit standards. netails of our review, including agency and contractor comments, are included in the enclosure. In summary, we concluded that the contract target price was overstated by $472,000 because: (942167) /c2/S 1) P

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