Impact of Navy Report of F-18 Ejection Seat Contract

PSAD-77-167: Published: Sep 28, 1977. Publicly Released: Sep 28, 1977.

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Nothing in the Navy's report nor the comments from an unsuccessful bidder changes the GAO original conclusions concerning award of the F-18 ejection seat contract to McDonnell Douglas Corp.

The principal issues in the procurement are: (1) the better seat, from a technical standpoint, was not selected in favor of an acceptable but less costly seat; (2) the price upon which this decision was based was only a small portion of the total costs, including technical assistance costs incurred by prime contractor; and (3) there was no assurance that the lower price would not be offset by either higher life-cycle costs or recovery of development contract losses on follow-on production and spare parts contracts. Prime contractor's liability to its subcontractor was limited by the contract to $126,326.32 through September 1977. The costs to the government for terminating the present subcontract and awarding it to another source would also include the prime contractor's nonrecoverable costs. As a matter of sound procurement policy, the apparent ,buy-in, without adequate basis for ensuring that future prices do not include award losses, should not be allowed. There is no objection to the termination of the present subcontract unless the costs involved become excessive or the new contractor cannot meet the required delivery schedule.

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