Overhead Costs: Costs Charged by McDonnell Douglas Aerospace's Space Station Division
NSIAD-94-150
Published: Jun 23, 1994. Publicly Released: Jul 15, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed a federal contractor's overhead costs, focusing on: (1) whether there were any unallowable costs included in its cost submissions; and (2) the extent to which overhead costs questioned by the Defense Contract Audit Agency (DCAA) were sustained during annual indirect expense rate negotiations.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Management and Budget | The Director, Office of Management and Budget (OMB), should direct the Administrator, Office of Federal Procurement Policy, to initiate action to revise the Federal Acquisition Regulation (FAR) to clearly state that contractor payments of employees' taxes under all forms of domestic incentive compensation, bonus plans, and expense reimbursements are unallowable. |
Closed – Not Implemented
The Office of Federal Procurement Policy is requesting establishment of a Federal Acquisition Regulation case to address this issue.
|
| Office of Management and Budget | The Director, OMB, should direct the Administrator, Office of Federal Procurement Policy, to initiate action to clarify FAR as to the allowability of employee assignment pay. |
Closed – Not Implemented
The Office of Federal Procurement Policy is requesting establishment of a Federal Acquisition Regulation case to address this issue.
|
| Department of Defense | The Secretary of Defense should direct the Commander, Defense Contract Management Command, to emphasize to contracting officers the need to ensure that there are reasonable limits on the government's liability for contractor employees' educational expenses. |
Closed – Implemented
On August 30, 1994, the Defense Logistics Agency issued a memorandum to the administrative contracting officers discussing GAO's findings on the treatment of educational expenses and emphasizing the need for consideration of advance agreements in this area.
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Topics
Accounting proceduresAdministrative costsAllowable costsContract oversightDepartment of Defense contractorsFinancial recordsInternal controlsOverhead costsSpace stationFederal acquisition regulations