Army Contracts Overpriced Due to Misapplication of Spares Formula Pricing Factor

NSIAD-85-27: Published: Mar 22, 1985. Publicly Released: Mar 22, 1985.

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GAO examined selected pricing aspects of five Army contracts for the production of spares for the UH-60 helicopter. Specifically, GAO determined the reasons for any price differences and the reasonableness of the prices the Army paid.

GAO found that the contracts were overpriced by about $872,000 because the contractor did not give Army contracting officials information relative to the use of a spares formula pricing factor. Although the use of the factor was not appropriate, certain of its elements would have been appropriate for pricing both spares and complete end items.

Recommendation 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 Commanding General, U.S. Army Aviation Systems Command, should, where justified, obtain contract price adjustments. If it is determined that the contracts were overpriced, but that a legal basis does not exist for recovery, appropriate procedures should be followed as outlined in the Secretary of Defense memorandum of July 25, 1983, on spare parts procurement.

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


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