Contract Pricing:

Subcontractor Prices Overstated on AN/TSQ-111 Communications Contract

NSIAD-86-166: Published: Aug 22, 1986. Publicly Released: Aug 22, 1986.

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GAO reviewed whether a contractor provided accurate, complete, and current cost or pricing data for selected subcontracted items on communications equipment contracts.

GAO noted that the Air Force and the contractor agreed to a contract price for a production program and, as a result, the contractor certified that the cost data for the contract was accurate, complete, and current; however, the contractor did not submit accurate or current data for the parts it purchased from seven subcontractors. GAO found that: (1) the contractor overstated the prices for five subcontractors and understated the prices for two other subcontractors, which resulted in a $962,192 cost overstatement; (2) the overstatement was a result of contractor errors and omissions in the data it submitted to the government; (3) the contractor did not provide certain cost and pricing data to the contracting officer before the close of prime-contract negotiations; and (4) the option buys included similarly overstated costs for parts.

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