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089394 1 (1975-11-12)

handle is hein.gao/gaobacvji0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE CHICAGO, ILLINOIS XM 60604 16th Floor West, 230 So. Dearborn Street 1 2 NOV 505 Commander Defense Supply Agency Defense Construction Supply Center Directorate of Procurement and Production Columbus, Ohio 43215 Dear Commander: As part of a nationwide review of contract prices negotiated under Public Law 87-653, we reviewed Defense Supply Agency (DSA) contract DSA 700-72-D-0030, awarded to Minnesota Mining and Manu- facturing Company (3M), St. Paul, Minnesota. The noncompetitive contract, signed February 2, 1972, provided for the delivery of 1,090,000 gallons of fire extinguishing foam for a total price of $6,278,500. Our examination was concerned with the reasonableness of the price negotiated for contract -0030 in relation to cost or pricing data available at the time of negotiations. We believe that, had all of the facts been considered in the negotiation of the contract, the price to the Government could have been reduced approximately $705,000. We believe the contract was overpriced because: --3M's proposal was based on the combined costs and estimates from its Chemolite plant in Hastings, Minnesota, and its Decatur, Alabama, plant, even though 3M was preparing to consolidate production at the more efficient Decatur plant. --DSA did not require 3M to submit a new price proposal when the foam specifications were changed. The attached enclosure lists the pertinent events occurring during the award and performance period of contract -0030. BACKGROUND The fire extinguishing foam is a flurochemical product developed to be mixed with fresh or salt water for use in smothering fires. '5

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