High Risk Series:

Defense Contract Pricing

HR-93-8: Published: Dec 1, 1992. Publicly Released: Dec 1, 1992.

Additional Materials:

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GAO reviewed the Department of Defense's (DOD) contracting practices, focusing on the significant risks it faces as a result of overpriced contracts.

GAO found that: (1) DOD found $3.67 billion in overcharges in defense contracts in fiscal years 1987 through 1991, of which 37 percent was due to subcontractors' overcharges; (2) DOD required major contractors to establish adequate cost-estimating systems and include subcontract price evaluations in their contract proposals; (3) despite strengthened regulations and emphasis on subcontract pricing, overcharges due to inflated subcontractor estimates continued; (4) DOD oversight of contract pricing was inadequate, and corrective actions were insufficient; (5) the Defense Contract Audit Agency was unaware of 88 percent of the subcontracts because prime contractors were not required to provide lists of their subcontractors; (6) contracting officers did not adequately review contractors' actions and enforce compliance; (7) the DOD audit follow-up system did not provide accurate and complete information on many high-risk contractors' cost-estimating systems; and (8) DOD could ensure fair and reasonable profits for defense firms if it established a financial reporting system that provides information comparing defense and nondefense contract costs.

Below are the reports in this series:

High Risk Series: Farmers Home Administration's Farm Loan Programs HR-93-1, Dec 1, 1992

High Risk Series: Guaranteed Student Loans HR-93-2, Dec 1, 1992

High Risk Series: Bank Insurance Fund HR-93-3, Dec 1, 1992

High Risk Series: Resolution Trust Corporation HR-93-4, Dec 1, 1992

High Risk Series: Pension Benefit Guaranty Corporation HR-93-5, Dec 1, 1992

High Risk Series: Medicare Claims HR-93-6, Dec 1, 1992

High Risk Series: Defense Weapons Systems Acquisition HR-93-7, Dec 1, 1992

High Risk Series: Defense Contract Pricing HR-93-8, Dec 1, 1992

High Risk Series: Department of Energy Contract Management HR-93-9, Dec 1, 1992

High Risk Series: Superfund Program Management HR-93-10, Dec 1, 1992

High Risk Series: NASA Contract Management HR-93-11, Dec 1, 1992

High Risk Series: Defense Inventory Management HR-93-12, Dec 1, 1992

High Risk Series: Internal Revenue Service Receivables HR-93-13, Dec 1, 1992

High Risk Series: Managing the Customs Service HR-93-14, Dec 1, 1992

High Risk Series: Management of Overseas Real Property HR-93-15, Dec 1, 1992

High Risk Series: Federal Transit Administration Grant Management HR-93-16, Dec 1, 1992

High Risk Series: Asset Forfeiture Programs HR-93-17, Dec 1, 1992

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