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PSAD-79-15 1 (1979-01-04)

handle is hein.gao/gaobaayku0001 and id is 1 raw text is: )UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. Z0548 PI11OCURKM0IT ANO SYUTMS ACQUISITON OIVUSION B-168450 JANUARY 4,1979 108275 The Honorable Harold Brown The Secretary of Defense Attention: Assistant Secretary of Defense (Comptroller) Dear Mr. Secretary: We have reviewed the pricing of subcontract 11-52792 -' O 0C a~warded on October 10, 1974, by the Grumman Aerospace Cor- poration to the General Electric Armament Department,->LecSD6 Burlington# Vermont. This firm-fixed-price subcontract for $2,407,360 was for 80 20MM internal feed and drive systems to be used on the F-14 aircraft. The F-14 is being manu- factured by Grumman for the Department of the Navy under prime contracts N00019-75-C-0078 and N00019-75-C-0013. This subcontract was selected as part of a nationwide review of the pricing of negotiated noncompetitive subcon- tracts awarded under Department of Defense (DOD) negotiated noncompetitive prime contracts. Our objective was to determine the reasonableness of the subcontract price in relation to cost or pricing data available to the subcontractor at the time of subcontract negotiation. Our review was performed at the subcontractor's facility where we reviewed documents and held discussions with subcontractor personnel. We also considered work done by the Defense Contract Audit Agency and Defense Con- tract Administration Services Office staffs located at the subcontractor location. In summary, we found that General Electric's proposed costs for labor variances were not based on current data. We believe that had such data been disclosed, Grumman would have had a sound basis to reduce the subcontract price by about $101,732. PSAD-79-15 03076 (950450)

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