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093313 1 (1972-07-31)

handle is hein.gao/gaobacxdv0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE ROOM 7054 FEDERAL BUILDING 300 NORTH LOS ANGELES STREET Los ANGELES, CALIFORNIA 90012 JUL 3 11972 Rear Admiral Stuart H. Smith Commanding Officer U. S. Navy Aviation Supply Office 700 Robbins Avenue BOCUMENT AVAILABLE Philadelphia, Pennsylvania 19111 Dear Admiral Smith: We have recently completed a survey of the pricing of negotiated defense contracts at AiResearch Manufacturing Company of Arizona, Phoenix, Arizona. The objective of our survey was to determine the extent of compliance by contractor and Government personnel with the requirements of Public Law 87-653 and the implementing provisions of the Armed Services Ifocurement Regulataon (ASPR). During our survey we noted that the negotiation of unpriced orders awarded under basic ordering agreements (BOA's) by your activity had not been conducted in a timely manner. The following observations are presented for your consideration of actions you may deem appropriate to improve the price negotiation process. Included in our survey were eleven orders over $100,000 awarded to AiResearch during the period July 1, 1969, to February 29, 1972, under BOA's N00383-67-A-2301 and N00383-69-A-3902. These orders, which were completed by the contractor during this time frame, are identified in the enclosure. For eight of the orders, price negotia- tions were not completed until 3 to 5 months after receipt of the field pricing support (audits of the price proposals by the Defense Contract Audit Agency; also, price/cost analysis and technical evaluations by Defense Contract Administration Services). The delayed negotiation of contract prices generally (1) creates additional administrative burden for contractors to update cost proposals, (2) results in the initial field pricing support being less effective in negotiations, and (3) stimulates a cost-plus environment. A majority of these orders were negotiated during the 6 months ended December 31, 1970. The contractor submitted updated cost or pricing data prior to negotiations for 6 of the 8 orders. There were relatively few orders over $100,000 awarded to AiResearch in 1971 and

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