Contract Pricing:

A Low Percentage of Contractors Are Responsible for Most Reported Defective Pricing

NSIAD-93-1: Published: Nov 24, 1992. Publicly Released: Dec 21, 1992.

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Pursuant to a congressional request, GAO provided information on Department of Defense contracts which contain defective pricing, focusing on the: (1) amount of defective pricing found by the Defense Contract Audit Agency (DCAA) during their fiscal year 1991 audits; and (2) percentage of contractors responsible for the defective pricing.

GAO found that: (1) defective contract pricing continues to be a persistent problem and causes defense contract prices to be overstated by billions of dollars; (2) between 1987 and 1991, DCAA audited 8,566 prime contracts and 1,053 subcontracts and found defective pricing totalling $3.67 billion; (3) defective pricing costs decreased from $896.6 million in 1990 to $730.7 million in 1991; (4) between 1987 and 1991, 6 percent of defense contractors were responsible for 80 percent of the $3.67 billion total in defective pricing; and (5) for fiscal years 1990 and 1991, 7 percent of the contractors were responsible for 86 percent of the defective pricing reported by DCAA.

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