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089590 1 (1976-05-24)

handle is hein.gao/gaobacvqh0001 and id is 1 raw text is: o kqW V r~'1 ~ ~ ~ () 15'qo MAY 2 4 1976 Mr. Bernard B. Lynn Director Defense Contract Audit Agency Building 4 Cameron Station Alexandria, Virginia 22314 Dear Mr. Lynn: Enclosed for your information is a copy of a report that we recently issued to the Commander, Naval Air Systems Commar (NAVAR,), covering defective pricing in NMAVAIR's negotiated contract N00019-74- C-0131 with Texas Instruments, Inc. (TI), Dallas, Texas. As stated in the report, we also found that the Government contributed to a portion of the identified overpricing by overlooking and failing to incorporate in the contract price the lowest base shop labor cost proposed by the contractor. Irrespective of this latter deficiency, however, we believe the Government could have possibly negotiated a lower contract price if the Defense Contract Administration Services Office (DCASO) had not made certain assumptions and miscalculations in computing its independent system base shop labor estimate for the contract. DCASO's estimate of the base shop labor cost per system was the amount that was ultimately negotiated under the contract. We believe, also, that DCASO and the Defense Contract Audit'Agency (DCAA) would have been in a better position to recommend, or justify, a lower contract price if they had coupled their independent estimates of the contract price with an evaluation of the contractor's historical labor cost data. Since DCASOts estimate of negotiated under the contract, made in computing its estimate being overstated by about $836 you and the Deputy Director of future evaluations of contract the base shop cost was the amount we estimate that the errors which DCASO may have contributed to the contract price ,000. We are reporting these matters to DCASO for your consideration in improving price proposals. INTRODUCTION Contract -0131, which was awarded.to TI on October 1, 1973, was NAVAIR's fourth production buy of AN/APS-116 airborne anti-submarine UNITED STATES GENERAL ACCOUNTING OFFICE DALLAS REGIONAL OFFICE SUITE 800, 1200 MAIN TOWER DALLAS, TEXAs 75202

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