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089592 1 (1976-05-20)

handle is hein.gao/gaobacvqj0001 and id is 1 raw text is: * a-NITED STATES GENERAL ACCOUNTING OFFICE DALLAS REGIONAL OFFICE cou 01 SUITE 800. 1200 MAIN TOWER DALLAS, TEXAs 75202 MAY 20 67 Commander, Aeronautical Systems Division - Air Force Systems Comand Wright Patterson Air Force Base, Ohio Dear Commander: As part of our nationwide survey of noncompetitive prime contracts negotiated under the provisions of Public Law 87-653 (10 U.S.C. 2306), we examined the prices proposed and negotiated for fixed price, incen- tive firm (FPIF) contract F33657-74-C-0105. The Aeronautical Systems C.55& V Division (ASD) awarded the contract to E-Systems, Inc. (ESI), Greenville, Texas, on November 15, 1973, The original contract included a target price of $14,397,000 and a ceiling price of $15,900,000, or about 123 percent of the target cost. The contract also contained a sharing arrange- ment whereby within the ceiling price the Government and the contractor shared in any under or overrun of target cost by 80 and 20 percent, respectively. Contract -0105 provided for the modification and maintenance of three C-135 aircraft and followed a contract for similar work on the prototyne C-135 aircraft. By the time we had finished our work at ESI, the target price had increased to about $18 million because of various contract mod- ifications. This total included about $400,000 for over and above work not subject to the contract incentive provisions. Over and above work includes tasks which can be expected but not specifically identified in the initial contract. Our objective at ESI was to determine whether the price negotiated for contract -0105 was reasonable in relation to cost or pricing data available to the contractor when the price was established, and whether the Government adequately evaluated the pricing data. We therefore examined the cost or pricing data submitted by the contractor in support of the proposed costs, the negotiation memorandum, and the Government's evaluation of the contractor's price proposal. We also examined, on a selected basis, costs incurred by the contractor. ~O~5-1 1

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