Contract Pricing: Inadequate Subcontract Evaluations Often Lead to Higher Government Costs
NSIAD-91-161
Published: Apr 05, 1991. Publicly Released: May 22, 1991.
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Highlights
Pursuant to a congressional request, GAO reviewed subcontract estimates in four contracts awarded to three Department of Defense (DOD) prime contractors, focusing on whether recent revisions to DOD procurement regulations reduced or eliminated subcontract pricing problems that caused inflated contract prices.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct contracting officials to use existing management controls and sanctions to ensure that contractors routinely comply with the subcontract pricing regulations and that subcontract prices included in DOD contracts are fair and reasonable. Contractors should be held accountable for failure to comply with such regulations and contracting officials should be held responsible for enforcing contractor compliance. |
Closed – Implemented
DOD direction to the commanders of the Defense Contract Management Districts was issued on May 31, 1991 and June 19, 1991. The commanders were instructed to become personally involved in assuring that contractors correct estimating system deficiencies. If contractors fail to make adequate progress, commanders are to bring the issue to the attention of higher level management.
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Topics
Contract administrationContract costsContract negotiationsCost analysisDefense cost controlDepartment of Defense contractorsIrregular procurementProcurement regulationsQuestionable procurement chargesSubcontractors