Air Force C-130 Contract Price Is Overstated and Proper Action Has Not Been Taken To Improve Lockheed's Cost Accounting and Estimating Systems

GAO reviewed the pricing of the Air Force contract awarded to the Lockheed Georgia Company in 1978. The contract, for eight C-130 Hercules airplanes and technical data for the Air National Guard, was negotiated at a firm-fixed price.It was selected as part of a nationwide review of the pricing of noncompetitive prime contracts awarded by the Department of Defense. The objectives were to determine: (1) if laws, regulations, and procedures were followed in negotiating the contract price; and (2) whether the contract price is reasonable in relation to the cost or pricing data available to the contractor at the time of contract negotiations.