Contract Pricing:

Reviews of Defense Contractor Compensation Costs

NSIAD-90-249FS: Published: Aug 29, 1990. Publicly Released: Oct 2, 1990.

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Pursuant to a congressional request, GAO provided information on the Defense Contract Audit Agency's (DCAA) reviews of contractor compensation costs, focusing on the: (1) number of compensation reviews DCAA conducted; (2) amount of unreasonable compensation DCAA identified; and (3) status of the government's efforts to reduce unreasonable compensation.

GAO found that: (1) DCAA completed 361 compensation reviews from October 1, 1987, and December 31, 1989; (2) DCAA initially identified about $450 million in unreasonable compensation in 140 of the 361 reviews but later revised its findings to about $340 million in unreasonable compensation in 123 reviews; (3) DCAA reviewed defense contractors' compensation costs under its Contractor Employee Compensation System Review program, based on selection criteria that took into account the government's risk of accepting excessive compensation in government contracts; and (4) contractors agreed to reductions based on approximately $17 million of the $53 million in unreasonable compensation identified in 39 reviews.

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