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092605 1 (1971-06-30)

handle is hein.gao/gaobacwmc0001 and id is 1 raw text is: -D UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE 502 U S CUSTOMHOUSE 2D AND CmESTNUT STREETS PHILADELPHIA, PENNSYLVANIA 19106 June 30, 1971 Commanding Officer U.S. Navy Ships Parts Control Center Mechanicsburg, Pennsylvania 17055 Dear Sir: We have reviewed the pricing of 5-inch 38 caliber MK 52 MOD 0 projectfles purchased under noncompetitive firm fixed-price contract N00104-67-C-0084, which was dwarded by the U.S. Navy Ships Parts Control Center (SPCC) to Lansdowne Steel and iron Company, Morton, Pennsylvania. Our review was directed primarily toward determining the reasonableness of the price negotiatec in relation to cost or pricing data available to the contraccor at the time of negotiation. We also reviewed the Government's technical and audit evaluations of the contractor's proposal. Our review showed that the final contract price of 4,751,815 was about $164,000 higher than justified by cost or pricing data available at the time of negotiation. About $131,500 of the over- pricing resulted because Lansdowne failed to disclose to the Government negotiator that (1) tne cost oF steel purchased during performance under letter contract -0084 was lower than the cost included in the pricing proposal, (2) the proposal Included costs for pallets not to be furnished oy the contractor, and (3) the proposal included overstated labor costs based upon an inaccurately calculated estimate of labor hour requirements. We believe that the Government's technical and audit evaluations lacked sufficient depth to identify these deficiencies in the contractor's proposal. The balance of the overpricing, amounting to about $32,500, occurred because the Government negotiator old not attempt to negotiate a reduction in the option quantity unit price for a start-up labor cost provision not required for the additional units, BEST DOCUMENT AVAILABLE 50 TH ANNIVERSARY 1921 - 1971

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