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Contract Pricing: Defense Contract Audit Agency's Estimating Reports Can Be Improved

NSIAD-91-241 Published: Aug 01, 1991. Publicly Released: Aug 01, 1991.
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Highlights

Pursuant to a congressional request, GAO evaluated 101 Defense Contract Audit Agency (DCAA) reports reviewing defense contractors' cost-estimating systems.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Defense Contract Audit Agency So that DCAA audit reports adequately reflect the need to correct estimating deficiencies, the Director, DCAA, should emphasize to DCAA field audit offices the importance of providing examples of cost impact to demonstrate the significance of the deficiencies cited.
Closed – Implemented
The agency's corrective action plan will be submitted within the 60-day timeframe. On December 30, 1991, DCAA issued guidance requiring audit reports to cite specific cost impact of deficiencies. On September 13, 1991, DCAA issued guidance requiring estimating survey reports to measure actual cost impact from either examples or total activity in a particular area.
Defense Contract Audit Agency The Director, DCAA, should monitor estimating-system survey and follow-up reports until improvements are noted in field audit offices' compliance with regulatory requirements for recommending disapproval of contractor systems containing significant estimating deficiencies.
Closed – Implemented
The agency's corrective action plan will be submitted within the 60-day timeframe. On June 5, 1991, DCAA issued guidance emphasizing the requirement to recommend disapproval of estimating systems with significant deficiencies. The guidance also requires auditors to recommend ACOs require cost or pricing data at the $100,000 level, and that subsequent audit reports note uncorrected deficiencies.

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Topics

Auditing and Financial Management
Contract administrationContract costsDefense auditsDefense cost controlDefense procurementDepartment of Defense contractorsFuture budget projectionsProcurement regulationsReporting requirementsRisk management