DEAR JIM:

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00360R000800130010-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: November 11, 2016
• Document Release Date: April 13, 1999
• Sequence Number: 10
• Publication Date: October 19, 1960
• Content Type: LETTER

Sanitized - Approved For Release : CIA-RDP64-60360ROO' 0i
FOIAb3b1
Re: Cost Reports on Projects A.,
Now. that the term of PO-660 is coming to an end I'have?
been re-examining costs particularly where ceilings are involved.
It might: be best to re-establish how .1 obtain the. figures, I?report
to. you for Doug and his people.
In each cost report line 1 "Mat"erials furnished under
FP-1054" are those Items deliv.erea which are specifically ordered
for a given project and hence are readily identifiable. Line 2
"Materials not billed ,.eparately'" are items''ordered in bulk on
FP-1054 and are principally chemicals. We have records of how
much we- use per hour of machine operation, and this is what we
report here.'
Line 3 "Labor, Burden and Materials" are those charges
incurred on specific job ~iumbe-rs sets aside for each project under
Po-660. The costs reported to us by the accountants and, therefore,
those 'which we have. been reporting to you are what we call "factory
costs" and do not contain any fee or profit and contain only part
of our allowed G&A. PO-66.0 is a time and material contract' and
the hourly rates under which you are billed include a profit equiv
alent to our normal f"e and all of the G&A. The difference between
"factory cost" and "billing" Is about 11%. I have been intending
to. stop expenditures on specific projects when. the."factory cost"
equaled the amount allowed under-the contract less 9%, but if Doug
is transferring charges based on my cost reports this would result'
in an under transfer of the 11%. To use specific examples: under
PO-660 the contract allowable cost for C.is-$79,069 whereas this
represents a factory cost of $71,233 (approximately). The contract'
allowable on A is $25,000 and this representq a factory cost of
?'approima tely' $22,550.
I would like to know, whether you Want to make this 11%
adjustment down there, or -whether you want a note from me adjusting
? It in my next report' on each project.
Also I would like to know whether you want the reportipg
procedure changed in PO-1200 tc . ,:core nc--arly represent .what would
be the true billing cost.
Sanitized - Approved For Release : CIA-RDP64-0036OR000800130010-9
 Sanitized -.Approved For Release : CIA-RD 64-0036OR000800130010-9
Incidentally, PO-660 wap never-funded for "0"'so I
plan 'to transfer all charges to.date for 0 to PO-1200 and credit
Po-66o,
. ELG/
Sanitized - Approved For Release : CIA-RDP64-0036OR000800130010-9