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Use of Cost-Deferred-Fee Contracts Can Be Costly to the Government

MASAD-81-10 Published: Mar 11, 1981. Publicly Released: Mar 11, 1981.
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Highlights

GAO reviewed the use of cost-deferred-fee (CDF) contracts with a Navy contractor to determine the appropriateness of that type of contracts and their effect on contract prices. GAO also reviewed procurement records for eight of the contractor's contracts which represented follow-on procurements of missile launchers and gun mounts for the shipbuilding program. In addition, the performance of a Navy technical representative at the contractor facility where the Defense Contract Administration Services (DCAS) is the designated representative for the administration of contracts was reviewed.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Navy The Secretary of the Navy should take steps in its acquisition programs to ensure that contractors who supply urgently needed weapon systems have incentives to negotiate fair and reasonable contracts in a timely manner.
Closed
Please call 202/512-6100 for additional information.
Department of the Navy The Secretary of the Navy should make every effort to persuade FMC/NOD to establish a cost accounting system that will provide the information needed by the parties to reach an agreement on price.
Closed
Please call 202/512-6100 for additional information.

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Topics

Accounting systemsContract costsCost reimbursement contractsFixed price contractsInteragency relationsNational defense operationsPrice adjustmentsSole source procurementWeapons systemsMilitary forces