Contract Overpriced Because of Duplicate Labor Hours and Excessive Material Pricing Rates

PLRD-83-93: Published: Jul 7, 1983. Publicly Released: Jul 7, 1983.

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GAO reviewed the pricing of a contract awarded by the Army Missile Research and Development Command.

GAO found that the contract target price was overstated by $472,000 because: (1) the contractor submitted cost data resulting in the Government's accepting duplicate fabrication and assembly hours for a number of major assemblies; and (2) the contracting officer did not rely on the most recent contractor cost data available in negotiating material attrition and line flow material rates. The overstatement in the target price resulted in increased costs to the Government totaling $265,000.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commander, U.S. Army Missile Command, should determine the extent to which the Government is entitled to price adjustment for the duplicate card cage labor hours.

    Agency Affected: Department of Defense: Department of the Army: U.S. Army Missile Command

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commander, U.S. Army Missile Command, should determine what action is needed to preclude future acceptance or negotiation of material attribution and line flow material rates higher than indicated by the contractor's most recent costs data.

    Agency Affected: Department of Defense: Department of the Army: U.S. Army Missile Command

 

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