Pricing of Two Negotiated Noncompetitive Prime Contracts Awarded by the Naval Air Systems Command

A limited survey was conducted of the pricing of two negotiated noncompetitive prime contracts awarded by the Naval Air Systems Command during fiscal years 1975 and 1976. The objective of the survey was to determine the extent of compliance with the requirements of the Truth in Negotiations Act and the implementing provisions of the Armed Services Procurement Regulation. This effort was part of a nationwide survey of the Department of Defense noncompetitive prime contracts to determine whether more intensive examinations of the reasonableness of the pricing were warranted.

Applicable defense procurement procedures were effectively implemented except that: (1) an exemption from the submission of cost or pricing data was granted to one contractor without an adequate determination having been made that the end items had been sold in substantial quantities to the general public to justify the exemption and the reasonableness of the contract price was not established; and (2) contract price negotiations were significantly delayed until a substantial amount of costs had already been incurred or committed. The delay resulted in a large number of updated cost submissions and additional government evaluations of the cost information.