Examination of Department of the Air Force Contracts with General Electric Company Heavy Military Electronic Equipment Department Syracuse, New York

B-133251: Dec 31, 1959

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The report shows that the firm-fixed price negotiated for radar height finders under contract AF 30(635)-4377 was excessive by about $329,000 because of the use in negotiations of estimated material costs in excess of amounts which bad been quoted to GE for this contract by its suppliers of the material. The report also shows that, under price-redeterminable contracts AF 30(635)-2583 and AF 30(635)-4130 for radar equipment, GE was permitted to hold excess provisional payments of $1,400,000 for about 2 years.

After GAO's examination, GE made voluntary refunds to the Air Force of $320,000 for the lower price quotations received from suppliers before contract negotiations and of $1,400,000 for the excess provisional payments that were being held pending price revision of the two other contracts. The Air Force has recently taken certain specific actions which we believe should contribute significantly to the negotiation of fair and reasonable prices.