CONTRACT NEGOTIATIONS WITH (Sanitized) ON SPARE PARTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72B00464R000400090020-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 12, 2016
• Document Release Date: July 22, 2002
• Sequence Number: 20
• Publication Date: March 16, 1966
• Content Type: MFR

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16 March 1966
SUBJECT: Contract negotiations with
MEMORANDUM FOR THE RECORD
STATINTL
The immediate negotiation concerned L__] Lists IP1 and V40;
STATINTL
n spare parts.
1. On 3 March 1966, a negotiation was held at for
the purpose of definitizing spare parts on Contract 322.
STATINTL
however, a secondary consideration was to attempt to definitize
a pricing formula for subsequent Spare Parts Lists.
2. The following personnel were in attendance at the
negotiation:
Contractor Personnel
STATINTL
STATINTL
SPO representatives Ihad attended a pre-
negotiation meeting a on pares on 28 January 1966 with
the Government team an e cost elements for spares pricing
were discussed. The SPO imputs from the pre-negotiation con-
ference were used in this 3 March 1966 negotiation.
STATINTL
STATINTL proposed
3. Lists #1 and #40 were at price
level by0. The Government team questioned "level of effort"
costs, shrinkage factors, and burdens as discribled in the
attached audit report (Attachment "A"). The Contractor retorted
to the questionable areas with statistics derived from similar
programs. Their rebuttal is contained in Attachment "B". As a
STATINTL
STATINTL
STATINTL
STATINTL
result of the discussions, a
This price is broken down to
and it shall be reflected in Contract FH-7322 as Exhibit "A"
dated 3 March 1966. STATINTL
STATINTL
4. In order to expedite the pricing and processing of
subsequent lists, the Government offered a pricing factor of
Ierto be applied to purchase part costs. The Government
o was based on a review of eleven new lists and reflected
approximately a 10% reduction from the Contractor's proposal.
The facto derived by applying G & A and material handling
charge ofto the purchase part costs. The Contractor
co with a factor and finally agreed to a factor
of Procedurely, the following describes the manner by
which subsequent lists will be priced:
Government Personnel
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A) Applies to Contract FH-7322 only.
B) Applies to Contractor lists containing only
"Purchase Parts"
C) The formula is: Cost = Material times
STATINTL
D) The Contractor will submit lists to the Auditor.
The Auditor will verify the material costs and
the proper application of the factor. Upon
receipt of his verification, the list will be
approved and incorporated into the contract.
Major
STATINTL
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