High Risk Series:

Defense Contract Management

HR-95-3: Published: Feb 1, 1995. Publicly Released: Feb 1, 1995.

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO reviewed the Department of Defense's (DOD) contract management, focusing on the significant risks it faces as a result of defective pricing and weak controls over unallowable overhead costs and contractor payments.

GAO found that: (1) although defective pricing has been reduced by 86 percent to 125.5 million in fiscal year 1993, significant financial risks remain; (2) DOD contractors' performance in correcting significant cost-estimating system deficiencies has been mixed; (3) recently DOD contractors identified and returned $75 million in apparent overpayments to the government; (4) DOD financial control weaknesses in identifying and excluding unallowable contractor overhead costs result in large, frequent, and numerous erroneous and fraudulent payments to defense contractors; (5) DOD needs to correct its long-standing contractor cost-estimating problems and address very serious weaknesses in its financial controls so that it can reduce contractor overpayments and fraudulent activities; (6) DOD contractors need to improve their procedures for identifying and excluding unallowable costs from overhead submissions; and (7) acquisition reform and streamlining legislation are positive steps toward strengthening DOD acquisition and contracting processes and properly protecting the government's and taxpayers' interests.

Below are the reports in this series:

High Risk Series: An Overview HR-95-1, Feb 1, 1995

High Risk Series: Quick Reference Guide HR-95-2, Feb 1, 1995

High Risk Series: Defense Contract Management HR-95-3, Feb 1, 1995

High Risk Series: Defense Weapons Systems Acquisition HR-95-4, Feb 1, 1995

High Risk Series: Defense Inventory Management HR-95-5, Feb 1, 1995

High Risk Series: Internal Revenue Service Receivables HR-95-6, Feb 1, 1995

High Risk Series: Asset Forfeiture Programs HR-95-7, Feb 1, 1995

High Risk Series: Medicare Claims HR-95-8, Feb 1, 1995

High Risk Series: Farm Loan Programs HR-95-9, Feb 1, 1995

High Risk Series: Student Financial Aid HR-95-10, Feb 1, 1995

High Risk Series: Department of Housing and Urban Development HR-95-11, Feb 1, 1995

High Risk Series: Superfund Program Management HR-95-12, Feb 1, 1995

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