AWACS Contract Price Overstated Because of Noncurrent, Inaccurate, and Incomplete Cost or Pricing Data

Gao ID: PLRD-81-29 May 26, 1981

A fixed-price incentive contract was awarded to a firm by the Air Force Systems Command, Electronic Systems Division. A review was made of the pricing of one modification to the contract. The objective of the review was to determine the reasonableness of the contract price in relation to cost and pricing data that were available to the contractor at the time of contract negotiations.

GAO found that the target price was overstated by as much as $3.4 million because cost and pricing data provided by the firm were not current, complete, or accurate. Furthermore, the Air Force price negotiation memorandum does not accurately reflect the results of negotiations for some major cost elements and is vague as to the justification for a $5.5 million pricing concession by the Air Force. Electronic Systems Division officials have agreed to take action to recover any overpricing that may have occurred and have also agreed to stress improving procurement records.


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, Logistics, and Readiness Division Phone: (202) 275-4268

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