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    Subject Term: "Contractor payments"

    6 publications with a total of 21 open recommendations including 11 priority recommendations
    Director: Timothy J. DiNapoli
    Phone: (202) 512-4841

    1 open recommendations
    Recommendation: The Under Secretary of Defense for Acquisition, Technology and Logistics should identify the specific types of information that would best meet the department's needs and, based on that determination, collect and analyze relevant data after contract performance is sufficiently complete to determine the extent to which contracts with incentives achieved their desired outcomes.

    Agency: Department of Defense: Office of the Secretary of Defense: Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Michele Mackin
    Phone: (202) 512-4841

    3 open recommendations
    Recommendation: To improve the use of warranties and guarantees in Navy shipbuilding, the Secretary of the Defense should direct the Secretary of the Navy, in arrangements where the shipbuilder is paid to correct defects, to structure contract terms such that shipbuilders do not earn profit for correcting construction deficiencies following delivery that are determined to be their responsibility.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the Department of Defense partially concurred with this recommendation, and has completed a study reviewing our findings. The study, conducted by the CNA Analysis and Solutions, found that our recommendations were well founded and appropriate. In response to our report and the study, the Navy states it will provide written guidance by the end of 2017 to prevent shipbuilders from earning profit for correcting shipbuilder-responsible defects.
    Recommendation: To improve the use of warranties and guarantees in Navy shipbuilding, the Secretary of the Defense should direct the Secretary of the Navy to establish and document a clear objective for using a guaranty, and then create guidance for contracting officers that illustrates how to implement a guaranty that meets this objective. This guidance should describe how contracting officers should use aspects of the guaranty, including determining an appropriate limitation of liability, to achieve the objective and include considerations as to when a guaranty should be a separate contract line item.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the Department of Defense partially concurred with this recommendation, and agreed to conduct a study to determine what policy and guidance changes are necessary to provide guidance on the many factors that should be considered to effectively implement warranty and guaranty provisions. As of April 2017, this study is complete and the Navy states that it now concurs with our recommendation. In doing so, the Navy is drafting an instruction, including a decision template, laying out the considerations underlying the decision to use warranties, guarantees or other mechanisms. This instruction will help contracting officers choose an appropriate tool and document the decision in a business clearance memorandum. The Navy plans to implement the instruction by the end of 2017.
    Recommendation: To improve the use of warranties and guarantees in Navy shipbuilding, the Secretary of the Defense should direct the Secretary of the Navy, for future ship construction contracts, to determine whether or not a warranty as provided in the FAR, provides value and document the costs, benefits, and other factors used to make this decision. To inform this determination, the Navy should begin differentiating the government's and shipbuilder's responsibility for defects and track the costs to correct all defects after ship delivery.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the Department of Defense partially concurred with this recommendation, and has completed a study reviewing our findings. The study, conducted by the CNA Analysis and Solutions, found that our recommendations were well founded and appropriate. In response to our report and the study, the Navy states it will include separate contract line items for FAR-type warranties in at least two solicitations for ship construction. In addition, the Navy states that it plans to revise data requirements to better gather and track contractor responsible defects, and then develop analytical methods to help make better determinations in the future as to the optimal guaranty duration and limit of liability. They expect to complete these activities by December 2017.
    Director: King, Kathleen M
    Phone: (202) 512-7114

    3 open recommendations
    including 3 priority recommendations
    Recommendation: As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should ensure that work statements included in solicitations for contract proposals and the executed contract(s) set clear expectations about the work CMS intends the RAC to perform and that time frames are established that reflect the time needed to reach milestones.

    Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
    Status: Open
    Priority recommendation

    Comments: HHS agreed with our recommendation. As of March 2017, HHS stated that the agency was evaluating its strategy for the Medicare Part D RAC. Once HHS has completed its evaluation, we will update the status of these recommendations. As of May 2017, GAO considers this recommendation open.
    Recommendation: As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should conduct annual evaluations of the RAC's performance against measurable performance standards to provide a clear basis on which CMS and the RAC can assess RAC performance in identifying improper payments.

    Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
    Status: Open
    Priority recommendation

    Comments: HHS agreed with our recommendations. As of March 2017, HHS stated that the agency was evaluating its strategy for the Medicare Part D RAC. Once HHS has completed its evaluation, we will update the status of these recommendations. As of May 2017, GAO considers this recommendation open.
    Recommendation: As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should review the agency's process for identifying, reviewing, and approving new audit issues to identify process improvements that will help ensure the efficient development of appropriate audit issues (i.e., reduce audit issue denials and increase audit issue approvals) and thereby maximize the collection of improper payments.

    Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
    Status: Open
    Priority recommendation

    Comments: HHS agreed with our recommendations. As of March 2017, HHS stated that the agency was evaluating its strategy for the Medicare Part D RAC. Once HHS has completed its evaluation, we will update the status of these recommendations. As of May 2017, GAO considers this recommendation open.
    Director: David C. Trimble
    Phone: (202) 512-3841

    5 open recommendations
    Recommendation: To help improve its ability to assess the risk of improper payments and make more effective use of DOE and contractor resources, the Secretary of Energy should direct the department's Chief Financial Officer to revise the department's IPERA guidance and direct field office sites with responsibility for non-M&O contractor risk assessments to address risk factors as they relate to those sites and take steps to ensure sites implement it.

    Agency: Department of Energy
    Status: Open

    Comments: As of May 2017, DOE had revised its fiscal year 2015 and 2016 improper payments guidance. The revised guidance directs field office sites with responsibility for non-M&O contractor risk assessments to address risk factors as they relate to those sites. The guidance further requires each site Chief Financial Officer to certify to the accuracy of improper payments and risk rating. We will continue to monitor DOE's efforts to ensure sites implement this new guidance.
    Recommendation: To help improve its ability to assess the risk of improper payments and make more effective use of DOE and contractor resources, the Secretary of Energy should direct the department's Chief Financial Officer to revise the department's IPERA guidance and clarify how payment sites are to address risk factors and document the basis for their risk rating determinations and take steps to ensure sites implement it.

    Agency: Department of Energy
    Status: Open

    Comments: As of May 2017, DOE had revised its fiscal years 2015 and 2016 improper payments guidance requiring sites to prepare risk assessments using a new risk assessment format. The guidance states that the new format was developed to improve consistency among the sites and improve documentation supporting the risk ratings. In the new format, each risk factor includes a description of the risk factor, rating criteria and/or questions to consider during the evaluation to assist sites in determining a risk rating by payment type. The guidance also requires all sites to maintain supporting documentation for their risk assessment. We will continue to monitor DOE's efforts to ensure sites implement this new guidance.
    Recommendation: To help improve its ability to assess the risk of improper payments and make more effective use of DOE and contractor resources, the Secretary of Energy should direct the department's Chief Financial Officer to revise the department's IPERA guidance and clarify who is responsible at DOE for reviewing and approving risk assessments for consistency across sites and take steps to ensure those entities implement it.

    Agency: Department of Energy
    Status: Open

    Comments: As of May 2017, DOE had revised its fiscal years 2015 and 2016 improper payments guidance to require site Chief Financial Officers and the Director of Risk Management of the Loan Programs Office to provide a signed certification to DOE's Director of the Office of Finance and Accounting certifying to the accuracy of improper payments and the risk assessment and rating submitted. The guidance provides templates for these certifications. We will continue to monitor DOE's efforts to ensure sites implement this new guidance.
    Recommendation: To help improve its ability to assess the risk of improper payments and make more effective use of DOE and contractor resources, the Secretary of Energy should direct the department's Chief Financial Officer to revise the department's IPERA guidance and provide specific examples of other risk factors that present inherent risks likely to contribute to significant improper payments, in addition to the eight risk factors, direct payment sites to consider those when performing their improper payment risk assessments, and take steps to ensure sites implement it.

    Agency: Department of Energy
    Status: Open

    Comments: As of May 2017, DOE had revised its fiscal year 2015 and 2016 improper payments guidance. In addition to the required OMB risk factors, the guidance added the following additional risk factors to be included in the risk assessments: (1) contractor payment processing oversight and (2) segregation of duties. The guidance states these factors have been added to ensure that inherently high-risk areas that can contribute to a site's susceptibility to significant improper payments are properly evaluated. We will continue to monitor DOE's efforts to ensure sites implement this new guidance.
    Recommendation: To provide better transparency regarding its total known improper payments reported under IPERA, the Secretary of Energy should direct the department's Chief Financial Officer to improve public reporting on the amount of total known improper payments by disclosing additional information regarding this amount and the extent to which improper payments could be occurring.

    Agency: Department of Energy
    Status: Open

    Comments: As of May 2017, DOE had added supplemental information to its fiscal year 2016 Agency Financial Report. We will continue to gather additional information from DOE to determine the extent to which this information addresses the amount of total known improper payments.
    Director: Asif A. Khan
    Phone: (202) 512-9869

    8 open recommendations
    including 8 priority recommendations
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase planning activities for contract pay by documenting its contract pay end-to-end process by developing the necessary flowcharts and narratives for those processes excluded from the FIP.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase planning activities for contract pay by assessing the materiality (i.e., dollar activity and risk factors) of its processes, systems, and controls.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase planning activities for contract pay by completing a memorandum of understanding with each of the components.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase testing activities by validating the completeness and accuracy of the populations of transactions used to perform testing.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase testing activities by documenting and executing an audit strategy or plan for application-level testing of system controls.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Discovery Phase testing activities by coordinating with the components to classify all identified deficiencies as control deficiencies, significant deficiencies, and material weaknesses.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Corrective Action Phase activities by assessing the population of implemented corrective action plans to determine whether the deficiencies we found in our nongeneralizable sample of DFAS's corrective action plans are more wide spread in the population.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Recommendation: To ensure that DFAS is able to obtain the necessary assurance that its contract pay end-to-end process can produce, maintain, and sustain accurate, complete, and timely information in support of the components' and DOD-wide financial improvement and audit readiness efforts, the Under Secretary of Defense (Comptroller)/Chief Financial Officer should direct the Director of the Defense Finance and Accounting Service to address deficiencies in its Corrective Action Phase activities by revising its FIAR status reports to accurately reflect the current status of its audit readiness efforts.

    Agency: Department of Defense: Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
    Status: Open
    Priority recommendation

    Comments: This recommendation remains open. On July 14, 2016, and August 10, 2016, we met with DFAS and Office of the Undersecretary of Defense (Comptroller) officials to discuss the status of the recommendations for this report, clarify the documentation DFAS provided so far and additional documentation needed to address this recommendation. In addition, we spoke with DFAS officials on September 20, 2016, to clarify additional questions they had on our documentation needs. As of October 2016, DFAS officials told us that they were still working on improvements to their process documentation and controls in the contract pay area. DFAS recently provided documentation to support its actions related to this recommendation and we will continue to review relevant documentation and monitor the actions taken by DFAS.
    Director: Martin, Belva M
    Phone: (202)512-3000

    1 open recommendations
    Recommendation: To help inform DOD's use of long-term maintenance contracts, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology, and Logistics, in coordination with cognizant offices within each of the military departments, to collect and analyze information on the use of long-term maintenance contracts by major weapon system programs.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, DOD concurred with this recommendation and has since taken actions which may support the collection and analysis of long-term maintenance contracts. In January 2017, DOD's Office of Cost Assessment and Program Evaluation (CAPE) issued a memorandum stating its intent to update existing policies and systems to prescribe policies and procedures for the conduct of cost estimation and cost analysis for acquisition programs. Among the initiatives discussed in the memorandum is an updated approach to collect sustainment data through Contractor Cost Data Reporting (CCDR) in order to provide better information to support competing sustainment alternatives and approaches. According to officials from the Office of the Deputy Assistant Secretary of Defense for Materiel Readiness (MR), this step will expand the data collected from contractors on maintenance contracts and will include reporting on the use of award terms and other incentives for their maintenance contracts in the CCDR system. Data item descriptions for these reports have been developed by the department but have not yet been implemented to support maintenance contract data collection. This guidance is expected to approved by the end of 2017.