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NSIAD-84-21 1 (1984-02-23)

handle is hein.gao/gaobabngq0001 and id is 1 raw text is: 15 %-1 OM COMPTROLLER GENERAL OF THE UNITED STATES %IT WASHINGTON D.C. 20648 B-205285 FEBRUARY 23, 1984 The Honorable Jack Brooks Chairman, Subcommittee on Legislation and National Security Committee on Government Operations House of Representatives Dear Mr. Chairman: Subject: Escalation in Engineering Labor Rates at Defense Contractors (GAO/NSIAD-84-21) In response to your September 17, 1982, request and subsequent discussions with your office, we have reviewed a report issued in March 1982, by the Defense Contract Audit Agency (DCAA) at the Pratt and Whitney Aircraft Company, West Palm Beach, Florida. The report dealt with increases in Pratt and Whitney's labor rates for engineers and other employees in 1981 and with increases proposed for 1982, 1983, and 1984 for a forward pricing labor rate agreement between Pratt and Whitney and the Department of Defense (DOD). (Forward pricing labor rate agreements are voluntary agreements between contractors and the government which estimate future labor rates to facilitate pricing anticipated contracts during specified future periods.) As agreed with your offices our primary objectives were to review (1) the 18.8 percent increase DCAA reported in the average engineering labor rates at Pratt and Whitney in 1981, and (2) the validity of DCAA's reported $155 million in excess costs estimated to be incurred by the government during the period 1981-84. The details of the results of our review are included in enclosure I and are summarized below. DCAA reported that a substantial increase in Pratt and Whitney's average engineering labor rates in 1981 and proposed increases for 1982-84 would result in excess cost to the government of over $155 million. DCAA considered these increases to be excessive because they were substantially higher than its estimates of the increases experienced and to be experienced by government and private sector workers. DCAA (942218) , , .... * 123464

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