Cost Accounting Standard 414:

How DOD's Budget Profit Policy and Contractors' Investments Relate to Standard 414

NSIAD-88-41BR: Published: Nov 3, 1987. Publicly Released: Nov 17, 1987.

Additional Materials:

Contact:

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

In response to a congressional request, GAO reviewed the relationship of Cost Accounting Standard (CAS) 414 to the Department of Defense's (DOD) budget request and contractor profits to: (1) assess Army, Air Force, and Navy treatment of CAS 414 procurement funds in the budgeting process; (2) identify the amount of funds the services negotiated under CAS 414; and (3) identify which contractors received the largest amounts of these funds.

GAO found that: (1) the portion of the military services' budget requests associated with CAS 414 are identifiable only at the start of the budget review and approval process; (2) a general estimate of CAS-414-related funds showed an annual average for the services ranging from 2.4 to 3.3 percent from 1981 through 1986; and (3) during this period, the Air Force negotiated $1.93 billion, the Navy $1.97 billion, and the Army $567 million in CAS 414 funds. GAO identified 9 firms with whom the services negotiated the largest amounts and found that they: (1) did not keep records of their profits on facilities that they negotiated; and (2) received an estimated $1.82 billion, while their records showed that they made capital investments of about $2.76 billion. GAO also found that contractors believe that the: (1) cost recovery elements of CAS 414 reduce the risks associated with capital investment; and (2) DOD profit policy improves the viability of their projects.

Sep 20, 2016

Sep 6, 2016

Aug 19, 2016

Aug 12, 2016

Jul 29, 2016

Jul 28, 2016

Jul 13, 2016

Jul 11, 2016

Jun 13, 2016

Looking for more? Browse all our products here