Defense Contracting:

Key Data Not Routinely Used in Progress Payment Reviews

NSIAD-92-1: Published: Jan 14, 1992. Publicly Released: Jan 14, 1992.

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Pursuant to a congressional request, GAO reviewed excessive Navy progress payments to contractors associated with the A-12 Program, focusing on the adequacy of Department of Defense (DOD) procedures for reviewing contractors' requests for payment.

GAO found that: (1) the administrative contract officers (ACO) monitoring the contracts reviewed were not in the best position to prevent overpayments, since they did not use available cost and performance data to identify cost overruns; and (2) the Defense Contract Management Command issued guidance requiring Defense Plant Representative Offices (DPRO) to use available cost and performance data in quarterly program assessments and annual progress payment reviews, but not as a part of monthly progress payment reviews.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to the recommendation, the Defense Contract Audit Agency recently revised its audit program for review of progress payments. The Defense Contract Management Command has also developed a policy letter to emphasize the need for the Defense Plant Representative Office technical specialists to expeditiously communicate problems identified in contractor operations.

    Recommendation: To have reasonable and prompt assurances that progress payments are appropriate and accurate, the Secretary of Defense should require that: (1) ACO be provided with DPRO technical reports generated by the contractors' cost/schedule control systems, DPRO independent estimated completion costs, and production and delivery data; and (2) ACO use these data to identify contracts with performance problems as a basis to conduct detailed reviews of progress payment requests.

    Agency Affected: Department of Defense


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