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093993 1 (1976-06-24)

handle is hein.gao/gaobacuhr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE % REGIONAL OFFICE SUITE 1010. WORLD TRADE CENTER 350 SOUTH FIGUEROA STREET Los ANGELES, CALIFORNIA 90071 JUN 24 1976 Colonel Harry B. Urey, Jr. Commander, Defense Contract Administration Services Region 500 South Ervay Street Dallas, Texas 75201 Dear Colonel Urey: We recently completed a survey of the pricing of negotiated contract 6 F34601-73-C-3077 awarded to AiResearch Manufacturing Company of Arizona, / Phoenix, Arizona, by the Oklahoma City Air Logistics Center, Tinker Air Force Base, Oklahoma. The multi--year contract for C/KC-135A aircraft cartridge starters was initially awarded.for about $9.9 million, including V, option quantities. Our objective was to determine the extent of compliance / with the requirements of Public Law 87-653, the Truth-in-Negotiations Act, and the implementing provisions of the Armed Services Procurement Regulation (ASPR). We did not perform an in-depth examination of the reasonableness of the contract price. Our survey was limited to an evaluation of the pro- curement process with particular emphasis on the adequacy of field pricing support by contract administration and audit personnel and its use in contract negotiations. We found that applicable defense procurement procedures were effectively implemented with the following exceptions: --The existing AiResearch bid rate structure for associated manufacturing costs (AC) may not result in an equitable allocation of costs to Government contracts. We are recommending that the Defense Contract Audit Agency (DCAA) evaluate the estimating process and determine whether the AMC bid rate structure is appropriate. --The use of two different cost bases for allocating independent research and development (IR&D) expenses appears to be in noncompliance with ASPR.15-205.35(c). The condition also results in the allocation of general and administrative expenses to independent development costs contrary to ASPR 15-205.35(b). We are recommending that the Air Force IR&D negotiator along with the administrative contracting officer require the contractor to comply with the procurement regulation. i71/939 ~~/' -y ~

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