EVALUATION REVIEW OF(Sanitized)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72B00464R000400090027-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: December 13, 2010
• Sequence Number: 27
• Publication Date: November 12, 1965
• Content Type: LETTER

DEPARTMENT OF THE AIR FORCE
HEADQUARTERS UNITED STATES AIR FORCE
WASHINGTON 25, D.C.
REPLY TO
ATTN OF:
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V
OSA-4300-65
#1723
REPLY TO:
Audit Liaison Office
P. 0. Box 8155
S. W. Station
Washington, D. C.
12 November 1965
SUBJECT: Evaluation Review of ECP-2 Under
Contract AF 33(657)-12846
Airborne Instruments Laboratory
Deer Park, New York
TO Contracting Officer
REF: : AIL Proposal ECP #1940-2, dated 22 October 1965
1. A review has been made, to the extent deemed necessary of the
contractor's cost proposal for multiplixer switches. This review consisted
of an examination of the underlying data in support of proposed labor rates,
overhead rates, material pricing, travel and other direct costs. The
direct labor hours, material requirements, the necessity for the proposed
travel and overtime hours, are referred to for evaluation by a technical
representative.
2. A summary of the contractor's proposal by element of cost
and the auditor's recommendations are as follows:
Per
Contractor's
Pro osal
Auditor's
Recommended
Reduction
Ref.
Notes
Direct Labor - Engineering
3, 7~ 3
-0-
a
Direct Labor - Manufacturing
173882
-0-
a
Engineering Burden
104%
45,628
878
b
Manufacturing Burden
72%
13,233
536
b
Raw Materials and Purchased
Parts
24,295
2,209
c
Travel and Subsistance
2,737
-0-
d
Overtime Premium
1,918
-0-
e
Packaging and Shipping
l40
?0-
f
Subtotal
$1797-07
3, 62-3
G & A
7.5%
11 228
418
b
Total Cost
Ti 0
,~
Fee Re
u
t
d
q
es
e
8%
12 875
Total Proposal
173 09
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Ref. Notes:
a. Direct Labor:
For the purpose of this report only, the auditor accepts
the hourly labor rates used to extend the estimated labor hours. A
comparison was made of the.proposed composite rates used in each labor
class with the actual incurred to date rates of the 19411942 programs.
The subject effort will be performed by the same personnel. This com-
parison ascertained the reasonableness of the proposed hourly rates.
Attached as Exhibit A. is the contractor's breakdown of the direct labor
hours by class of labor and effort, which is offered as a guide for
evaluating the estimated labor hours by a qualified tachnical representative.
b. Burdens and G & A:
The auditor questions the contractor's proposed burdens
and G & A rates as excessive. Based on an analysis of the current year
book rates (9 months ended 30 September 1965), the auditor is of the
opinion, that the contractor may experience a lesser rate than proposed
and therefore recommends the following:
Engineering Manufacturing
Burden Burden G&A
Rates Per Contractor's Proposal 104% 74% 7.5%
Rates Recommended by the Auditor 102% 71% 7-4%
Per cent of Rate Questioned 2% 30 .l
Burden Base Per Proposal $43,873 117,M2
Per cent of Rate Questioned 2%
30
Costs Questioned (Base x Rate Reduction) T-777 $ 536
G&A Base Costs Questioned
G&A Questioned @7.4%
Total G&A Questioned (
268)
The contractor's proposed purchase parts were verified to
vendor's quotes and prior buys of like items. The extentions and additions
of the bill of materials were verified. No exceptions were noted, but the
applicability of the proposed purchased parts to the procured equipment and
the frequency of use, should be evaluated by a technically qualified repre-
sentative.
149,7o6
.1o
150
32 8
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The costs questioned of $2,209 represents the auditor's
exception to a 10% shrinkage factor applied to the total estimated costs
of raw and purchased materials (non-recurring costs excluded.) The
contractor could not support this factor with historical data or adequate
back-up and is therefore questioned by the auditor.
d. Travel and Subsistance:
The contractor proposed two 2-day trips to the West
Coast at $381 each and two 3-day trips at $416 each for the purpose of
visiting the associate contractor. In addition, three 2-day trips are
included for visitations to a West Coast vendor at a cost of $381 each.
The costs represent round-trip air fare of $305, subsistance of $35 per
day and $6 for travel to the airport. The auditor considers these costs'
acceptable, but recommends for further consideration of a technical
representative the necessity for the number of trips.
e. Overtime Premium:
The auditor recommends the overtime premium for the
further consideration of a qualified technical representative. The
contractor's estimate is based on application of a 10% factor to the
total estimated hours for labor classes V, VI, VII, VIII, and IX, and
priced at 2 of the hourly rates for these classes. The basis for a 10%
factor was not supported by the contractor. The contractor's computation
of overtime premium is as follows:
Labor.
Class
Hourly
Rate
Total
Estimated
Hours
Per Proposal
Overtime
Premium Hours
10% of Estimated
Hours
Overtime
Premium Rate
2 of Hourly
Rate
Total
Overtime
Premium
Per Proposal
V
4.50
2,710
270
2.25
608
VI
3.70
2,590
260
1.85
481
VII
3.27
2,860
290
1.62
470
VIII
2.80
2,390
240
1.40
336
IX
2.33
280
20
1.16
23
TOTAL Overtime Premium per proposal
$1,918
f. Packaging and Shipping:
Considered acceptable for the purpose of this report.
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'.r
g. Fee Requested:
The contractor has requested a fee based on 8% of the
WILLIAM F. EDWARDS
Auditor General Representative (APL)
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Cfll'TllI I 0lo1' I RTAMP O1i. HOT.fl.S
Ln;irre Jr~ln , Dr ..t t.;;.n{ ~, FF.zblicat;ionp -. 100 terra.
Adm. A S 0 N D J F M.
.25 .5 .5. .5 .5 .5 .25
.75 1.25 1.0
Buy Parts, Schod, Type Proc. &,AB
En .
Dcsi z EE 7 MM X 200 1400
ME 3 MM x 200 600
Te St Proc. .5 MM X 200 100
H ndbook .:.} NM X 2 00 100
P:;?oto Tort-Unit
Bela. .5 MM 100
i.B. --Test 1 MM 200
Prod . To:3-Isar.. ? i3. j cra..
7
Units x 10 45o
Tech.
Design D sign & Make
B Ass+y.
Test Proc.
P :oto Teri;
BB Test
Prod Test
45
7 MM X 130
.5MM'.X180
.5 MM x L8o
2MIX X180
ca. X 10
1260
90
90
360
45o
3 , 0 tit X 180 - 5~; ,"
2950
2250
.PC-BS u BS X 180 ea.
Assy. Dwc.
ECNS
1080
120
300
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7140 kIr:;,
Mfg. Parts & tbs.
Page 2 'ot' '
Prato - 50 Hrs. )C 1
Pad . w 2: X 10
Prato w br,l.rigg 6 Bd.'h, 304
1 Asst'.
d . 60 Bd s ! 21+ 04.
10 Assay. 80 4%
in Proc. 15% Shops W &..~A,',470
Pr~.r t~ . Roc ivth~; X30 ors,.;
Program Management
Reliability.
QA.
Management' Adm.
Management' ,Frig.
Pack and. Ship
Man .6 Months
Man 6 Months
'15 .,h rs . 270
Secretary. 10 Hrs -x MnnthG 1v
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.5 , Man 6 Months