Summary: The Renegotiation Board alleged that 117 million pounds of steel was unaccounted for and had been billed or was claimed to have been used for seven amphibious transport docks (LPDs) by Lockheed Shipbuilding and Construction Company. Lockheed contended that all steel was accounted for and that there was no basis for the Board's claim. A GAO review, a Lockheed internal audit, and an independent accounting firm study found that Lockheed spent about $10.8 million for about 134 million tons of steel instead of $18.1 million estimated by the Renegotiation Board. The primary reason for the Board's miscalculation was an erroneous assumption that increased costs of the LPD program were due to increased steel usage. Lockheed could not account for all of the steel purchased and charged to LPD cost accounts, but this was not a contractual requirement. The contracts were competitive and firm fixed priced; the Navy did not require, and Lockheed did not keep, records showing how the steel was used. In addition, the amount of steel actually used did not affect the cost to the government since the contract was firm fixed priced.
