Details Regarding Naval Air Systems Command Contracts With Patty Precision Products Company

PSAD-81-1: Published: Nov 24, 1980. Publicly Released: Dec 8, 1980.

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GAO was asked: (1) the name of the individual responsible for the release of a Department of the Navy contract without reference to an official set of Navy-issued modification instructions; (2) to obtain all relevant documents concerning the termination and litigation of a Navy contract with Patty Precision Products Company (Patty); (3) the name of the official who authorized a preponderance of premature progress payments; (4) the reason these payments continued after accounting irregularities were discovered; (5) the name of every employee who authorized additional progress payments to Patty after it had already been determined that Patty's accounting systems and controls were insufficient or unreliable for segregating and accumulating contract costs; (6) the reason why progress payments for work or supplies which had not been attained or which had not been delivered could be classified as accounting irregularities, and not as a criminal matter; (7) to clarify the distinction between progress payments and partial payments; (8) to obtain all documents pertaining to a demand for payment, and a counterclaim by the contractor, for the proper amount of interest to be charged in a contract dispute; and (9) the names of the officials who claimed they lost documents relevant to a contract.

GAO disclosed the names of the individuals as requested. It further responded that: (1) all the requested documents relating to the termination and litigation of the Navy contract with Patty were obtained; (2) the payments were continued because they were believed to be actual costs, and therefore no grounds existed to stop the payments; (3) payments could not be considered a criminal matter because the case had never been prosecuted; (4) a partial payment is where a contractor is paid for the delivery of a quantity of items which is less than the quantity ordered; (5) a progress payment is a reimbursement to a contractor for costs incurred in the pursuit of contract performance; and (6) all the relevant documents concerning a demand for payment and a contractor counterclaim for the proper amount of interest to be charged in a contract dispute were obtained.

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