Pricing of a Noncompetitive, Fixed-Price Incentive Contract for Maintenance and Modification of Three Special Purpose Aircraft

Examination of the pricing of a negotiated, noncompetitive, fixed-price incentive contract awarded to E-Systems, Inc., by the Aeronautical Systems Division of the Air Force Systems Command indicated that the contract target price was overstated by as much as $1.4 million because contracting personnel did not adequately evaluate the proposal. The contract provided for the maintenance and modification of three special purpose C-135 aircraft, including programmed depot maintenance as well as design, fabrication, and installation of special electronic systems and equipment.