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PSAD-80-10 1 (1979-11-16)

handle is hein.gao/gaobaazxu0001 and id is 1 raw text is: /ior~73 UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 PTOCUREMENT AND SYSTEMS ACQUISITION DIVISION NOVEMBER 16,1979 B-195254 The Honorable Harold Brown The Secretary of Defense Attention: Assistant for Audit Reports 110873 Room 3A336 ASD (Comptroller) Dear Mr. Secretary: Subject: relays in Definitizing Letter Contracts Clan Be Costly to the Governmen/( PSAD-80-i0) In a review of the Army's and Navy's use of letter contracts, our objective was to determine whether such con- tracts were being definitized 1/ in a timely manner and the impact of any untimely definitizations. In definitizing letter contracts, the Army and Navy often exceeded the time limits set forth in Defense regulations. This sometimes compromised the Government's negotiating position and thus increased costs, particularly in the case of the Navy. Also, neither the Army nor the Navy exercised the unilateral de- termination clause. SCOPE AND DEFINITION We analyzed selected letter contract data at the Army Tank-Automotive Materiel Readiness Command, the Army Arma- ment Materiel Readiness Command, the Naval Air Command, the Naval Sea Systems Command, and the Naval Material Command. We examined, in detail, procurement records for 87 of the 389 letter contracts awarded between July 1, 1973, and March 30, 1979, that had not been definitized within the time period set out in Defense regulations. We selected the Army and Navy for review because of the large increase in the number and dollar value, of letter contracts awarded during fiscal years 1973 through 1977. 1/To formalize a letter contract by setting forth all the terms and conditions of the agreement. (950534) 7i

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