Review of an Allegation That a Firm Incurred Unnecessary Test Costs on Cost-Type Contracts

GAO was asked to investigate an allegation that a contractor had a disregard for costs that were unnecessarily incurred and passed on to the Government on cost-type contracts. The specific allegations were that the firm: (1) incurred costs of more than $20,000 for unnecessary and duplicative tests on the same purchase orders; (2) paid vendors on different purchase orders for tests on identical parts from the same production lots; and (3) did not take action on suspected duplicate costs, when cost-type contracts were involved, because the Government was absorbing the costs.