Contract Pricing

Overpriced B-52 Bomber Avionics Subcontract Gao ID: NSIAD-88-38 November 30, 1987

GAO reviewed an Air Force subcontractor's pricing practices for the Offensive Avionics System/Cruise Missile Integration Program to determine whether it provided the prime contractor with accurate and complete cost data as required by the Truth in Negotiations Act.

GAO found that: (1) the subcontractor did not provide the prime contractor with accurate and complete data, which caused the prime contractor to overstate its contract costs by about $644,601; (2) the subcontractor did not inform the prime contractor of its plan to purchase certain items from another vendor at a reduced price; (3) the subcontractor failed to inform the prime contractor of its decision to purchase about 50 percent of the parts it had planned to make; (4) although the purchase order prices on the parts were significantly lower than its proposed prices, the subcontractor did not reduce its original price; and (5) although the subcontractor did not admit any liability for the overpricing, it agreed to repay any overdue amount.

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