Air Force Should Recover Excess Costs of Prior F-15 Contracts and Take Action To Save Costs on Future F-15 Contracts

Gao ID: PSAD-80-4 October 24, 1979

A review was made to determine the reasonableness of the production material costs accepted by the Air Force Aeronautical Systems Division for the production of 108 F-15 and TF-15 aircraft. The fixed-price incentive contract was awarded in 1977 to McDonnell Douglas Corporation at a negotiated target price of $789,053,670.

The target cost for the F-15 contract was overstated by about $2.4 million because the contractor did not use current, accurate, and complete cost or pricing data for negotiated production material cost. Also, because the contractor's profit was added to this overstatement, it will result in about $2.7 million excess cost to the government, depending on whether the target is underrun or overrun.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Robert M. Gilroy Team: General Accounting Office: Procurement and Systems Acquisition Division Phone: (202) 275-4268


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