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089600 1 (1976-05-11)

handle is hein.gao/gaobacvqr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE 8112 FEDERAL OFFICE BUILDING FIFTH AND MAIN STREETS CINCINNATI, OHio 45202 May 11, 1976 Lieutenant General James T. Stewart Commander, Aeronautical Systems Division 1 Wright-Patterson Air Force Base, Ohio 45433 Dear General Stewart: The General Accounting Office is currently reviewing the progress of the F-16 Weapon System. During this review, we noted that the cost to maintain idle capacity (MIC) at Air Force Plant Number operated by the Fort Worth Division of the General Dynamics C /15 / Corporation is paid directly through a nonprofit facilities contract. These same MIC costs are also included in the overhead rates applied to all contracts at the plant. To prevent MIC costs from being paid twice, the F-16 full-scale development contract was credited for the total fiscal year 1976 cost of MIC. Crediting a single contract for the total MIC cost lowers the reported cost of the credited contract but does not eliminate MIC costs from other General Dynamics' contracts. Since only cost and not profit is credited, it also causes the Air Force to pay profit on MIC costs commensurate with the risk associated with development and production efforts. In the case of the F-16 development contract credit for fiscal year 1976, MIC procurement funds improperly subsidized about $2.2 million in F-16 development costs. In July 1975, Aeronautical Systems Division (ASD) Procurement and Production officials requested that action be taken which would eliminate the need to credit a single contract for MIC costs each year. Since then, however, no further action has been taken nor apparently, is any planned. We are recommending that you assign to the appropriate ASD organization the responsibility for eliminating MIC costs from General Dynamics' overhead rates. BACKGROUND Air Force Plant Number 4 is owned by the Government but operated by the Fort Worth Division of the General Dynamics Corporation under nonprofit facility contract number F33657-72-C-0811. General Dynamics LG0<3 C0O

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