Improvements Needed in DOD Procedures To Prevent Reimbursement of Unallowable Costs on Government Contracts
NSIAD-85-81
Published: May 07, 1985. Publicly Released: May 07, 1985.
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Highlights
GAO reviewed final overhead cost settlements with defense contractors to determine the extent to which questionable costs were allowed.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Defense Acquisition Regulatory Council to coordinate with the Civilian Agency Acquisition Council to amend FAR section 31.205 to state that all costs made specifically unallowable under any subsection of FAR 31.205 are not allowable under any other subsections of FAR 31.2. |
Closed – Implemented
On April 9, 1986, FAR was amended to comply with the requirements of P.L. 99-145. The amendment introduced areas and an important concept by stating that costs which are made unallowable under public relations and advertising are not made allowable under other sections. Conversely, costs made unallowable under other FAR sections are not made allowable under any other subsection.
|
| Department of Defense | The Secretary of Defense should direct ACO to negotiate, settle, and document costs questioned as unallowable by DCAA on overhead claims on an item-by-item basis. |
Closed – Implemented
On August 5, 1985, the Deputy Secretary of Defense assigned responsibility for final indirect cost rate determinations for all contractor locations to DCAA. Overhead settlements will be based on audit determination procedures rather than contracting officer determination procedures. The Deputy Secretary directed that new guidelines be developed and FAR be modified to implement this directive.
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Advertising costsClaims settlementContract administrationContract costsDefense cost controlDefense procurementOverhead costsProcurement regulationsPublic relationsFederal acquisition regulations