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Defense Acquisition: Guidance Is Needed on Payments for Conditionally Accepted Items

NSIAD-98-20 Published: Dec 12, 1997. Publicly Released: Dec 12, 1997.
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Highlights

GAO reviewed the Air Force's procedures for payment to contractors for work not completed at the time of delivery, focusing on whether: (1) this situation occurred in other programs; and (2) additional guidance was needed to avoid paying contractors for work not done at the time of delivery.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense The Secretary of Defense should amend the DOD Federal Acquisition Regulation Supplement to require that, when conditionally accepting nonconforming items, amounts withheld be at least sufficient to cover the cost and related profit to correct deficiencies and complete other unfinished work. If the contracting officer determines that withholding a lesser amount is in the best interests of the government, such a determination should be properly documented and justified in the contract files.
Closed – Implemented
The FAR Secretariat opened case 98-002 dealing with the issue. The FAR Council gave its final approval in mid-September 1999. FAR Circular 97-14 will include the change GAO recommended to DFARS. The FAR was amended effective November 23, 1999.

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Topics

Contract administrationContract termsContractor paymentsMilitary aircraftWaiversQuestionable billingAircraft acquisition programMilitary forcesU.S. Air ForceU.S. Army