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089578 1 (1976-01-05)

handle is hein.gao/gaobacvpt0001 and id is 1 raw text is: 
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UNITED STATES GENERAL ACCOUNTING OFFICE
           REGIONAL OFFICE
        ROOM 717, GATEWAY II BUILDING
             4nH AND STATE
        KANSAS CITY, KANSAS 66101


                        January 5 1976




Liezzena: General James T. E-ewart
3Cc=zder:                           1611
Aeronantizal Systems Division (AC)       Kt F
:-right-Fazzarson Air Force Z:e, Chic 45433


LMos9578


Lear Gener Stewart:-

    Qs b:e reviewed contrac -33057-71-2-O(43 hici the Aeronautical
-y,,t   ' ;Lisicn (13D) negotiated with the  loDonnell Douglas lectronics '
5cepay, So. Charle,     isscuri.   Ms fixed-price in    ntive Contract is
fon two riner Z:ision Sinhlatcr: fc A-7D 4aIr       t     n-mde the re-
via, s   iarmine whether the price negotiated :ai reavonable in relation
to coa: co pricing data avzitole tc W.Donnel2 at       jrhe tet e e was


     0cm::yn F33057-74-0-043 rovide :co We -oarenent of one A-7D
Yint:: iz w:ith an e ion tC purchase afndditi-l3 cus. The neqotiation-
fo  the Mrst ;iulater were      coeletec on Septetiee1-,    173. The option
rice f:  the econ  cirlt    :  necotiated ca Zovember 16, 1973, and
AOD exeroed its option in lwgmct 1974. The nsyotiated Frie: for the
to  simrl::cs were     A0',69521 end  5,75:90M.    Jrtifir::te; cf Garrent
Ct   or i:ing Data were ci-ned by Zconnell on October 2, 1973, and
overnber is, 1973.

    Ue heleve the negotiated price reflected an cverotatement of costs
in the e  =oomt Qf  bout -12,513.    varctatements were due to: 1) the
contractorls and ASD's failu e nc  rnsaer resi-c'1 inventory in the
calcvacn   of estimated raterial costs, 2) daplizntion of proposed
material item 3) a price artencion error and 4: a resultant change
in  he 1::rial Zre::th rte. underotntementF re.-dted frcn the uEe of
intres:  prior costs for certain maverinl esmina.es and the omission
W  an Me= in the contract procsal.     The effect- of the overstatements
and  ncderstatement: cn the proczeed and negotiated crices are shown in





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