Contract Pricing:

Defense Contractor Cost Estimating Systems

NSIAD-88-7: Published: Jan 5, 1988. Publicly Released: Mar 4, 1988.

Additional Materials:


Office of Public Affairs
(202) 512-4800

In response to a congressional request, GAO reviewed selected contractors' practices to determine whether they were developing and proposing accurate and reliable estimates for negotiating noncompetitive Department of Defense (DOD) contracts.

GAO found that: (1) 13 percent of the 247 major defense contractors did not have written estimating policies or procedures; (2) 25 percent of those with written policies and procedures did not have procedures for one or more major estimating tasks; (3) some contractors developed estimates without any analytical support or consideration of historical costs; (4) contractors did not always have procedures for comparing estimates to actual performance costs to assess their accuracy and reliability; (5) some contract prices were higher because of unidentified and unresolved weaknesses during contract negotiations; and (6) some contractors have revised their estimating procedures to correct identified weaknesses. GAO also found that DOD: (1) improved its regulations to require contract administration and audit personnel to jointly review contractor estimating systems at least every 3 years; and (2) provided improved guidance on estimating-systems reviews to its field offices.

Aug 20, 2020

Aug 14, 2020

Aug 6, 2020

Jul 30, 2020

Jul 27, 2020

Jul 23, 2020

Jul 22, 2020

Jul 20, 2020

Jul 16, 2020

Looking for more? Browse all our products here