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093099 1 (1974-10-17)

handle is hein.gao/gaobacwzg0001 and id is 1 raw text is: sr~ October 17, 1974 Vice Admiral R. C. Gooding, USN Commander, Naval Sea Systems Command Department of the Navy Washington, D.C. 20362 Qq3Qq9 ^11 1 iN jNt Dear Admiral Gooding: The General Accounting Office is performing a broad examination of the reasonableness of noncompetitive prime contract prices negotiated under the provislons of Public Law 87-653. As part of this examina- tion, we have reviewed four subcontracts awarded to General Electric Company (GE) by Newoort News Shipbuilding and Dry Dock Company (Newport News) under prime contract N00024-70-C-0252, dated February 5, 1970. Effective December 21, 1971, the contract awarded by the Naval Ship Systems Command, now the Naval Sea Systems Command, was converted from a cost plus fixed fee (CPFF) to a fixed-price-incentive (FPI) contract, with a sharing ratio of 80/20, a target price of $254.8 million, and a ceiling price of S300 million. The contract provides for the con- struction of three nuclear powered guided missile frigates, the DLG(N)'s 38, 39 and 40. Following is data on the subcontracts (purchase orders) we reviewed. Date Number 6-14-71 601H-4000-E-1 Mod. #5 10-6-71 601H-6100-MI Mod. #5 1-21-72 601H-6100-Ml Mod. #7 2-25-72 601H-4000-E-1 Mod. #11 Item Turbine generators for DLG(N) 39 Main propulsion units for DLG(N) 39 Main propulsion units for DLG(N) 40 Turbine generators for DLG(N) 40 Fixed Price $3,015,000 $2,829,330 $3,027,380 $3,204,000 The objective of our review was to find out whether the subcontract amounts included in the prime contractor's proposal were reasonable in relation to subcontractor cost or pricing data available at the time of prime contract negotiations. ,O~,77 UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE ROOM 1903 JOHN F. KENNEDY FEDERAL BUILDING GOVERNMENT CENTER BOSTON, MASSACHUSETTS 02203 09 3 oj 9

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