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Pricing of Contract F41608-85-D-A011, Delivery Order 0099, at General Electric Company - Aircraft Engine Business Group
INSPECTOR GENERAL DEPT OF DEFENSE ARLINGTON VA
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During our evaluation of contractor performance on the Audit of Spare Parts Pricing Agreements, Project 8CE-5001, we found that the General Electric Company was not providing certified cost or pricing data on orders issued against prepriced Basic Ordering Agreements and on orders issued under requirements contracts containing provisions for resetting prices. As a result, we made an audit of the pricing of contract F41608-85-D-A011, Delivery Order 0099, a requirements contract with provisions to annually reset prices to determine whether the contractor had submitted accurate, complete, and current pricing data at the time the order was repriced. In 1989, General Electric Company sales exceeded 42 billion. The Aircraft Engine Business Group, the largest operating element of the company, serves a broad range of customers, but primarily manufactures aircraft engines, spare parts, and performs research and development for the U.S. Government. General Electric Company sales to the U.S. Government were approximately and billion for 1988 and 1989, respectively. The audit objectives were to determine whether contract F41608-85-D-A011, Delivery Order 0099, awarded to the General Electric - Company, was overpriced and the reasons for overpricing. Criteria used to determine overpricing were Public Law 87-653, Truth in Negotiations Act Public Law 91-379, Cost Accounting Standards the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement. We reviewed the contractors proposal to the Air Force, the Governments contract documents, the Defense Contract Audit Agencys preaward audit reports, the Naval Plant Representative Offices cost and pricing analysis reports, the Governments price negotiation memorandum, and the contractors accounting records. Documents and records that we reviewed relate
APPROVED FOR PUBLIC RELEASE