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PSAD-79-82 1 (1979-05-25)

handle is hein.gao/gaobaazgx0001 and id is 1 raw text is: 10l14~77 UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 PROCUREMENT AND SYSTEMS 1 11 ACQUISITION DIVISION 109477 B-168450 MAY 25, 1979 The Honorable Harold Brown The Secretary of Defense Attention: Assistant for Audit Reports 109477 Room 3A336 _ ASD (Comptroller) Dear Mr. Secretary: We have reviewed the pricing of fixed-priced incentive contract DAAH01-77-C-0111. This contract was awarded to the Raytheon Company, Missile Systems Division, Andover, Massa- chusetts, by the U.S. Army Missile Materiel Readiness Command (Mircom), Redstone Arsenal, Alabama. It provides for fur- nishing 526 Improved Hawk (Ihawk) ground-to-air defense mis- siles. The negotiated target price of the contract is $31,771,040, and the negotiated ceiling price is $34,749,575. This contract was selected as part of a nationwide re- view of the pricing of negotiated noncompetitive contracts awarded by the Department of Defense. Our objective was to Sdetermine contract price reasonableness in relation to cost or pricing data available to the contractor at the time of contract negotiation, as required by -Public Law 87-653. Our review was performed at the contractor's facility where we reviewed documents and held discussions with con- tractor personnel. We also reviewed work done by Defense Contract Audit Agency (DCAA) and Defense Contract Adminis- tration Services Office staffs at the contractor's location. The details of our review are in the enclosure. In summary, we estimate that the target cost of the contract was overstated by about $710,000 because certain cost or pricing data the contractor provided the Army to support proposed material costs were not accurate, complete, and current. We believe this overstatement will result in ap- proximately $300,000 of excess cost to the Government. Also, PSAD-79-82 .(950463)

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