Fort Monmouth Procurement Activities:

Inappropriate Contract Actions May Increase Government Costs

PLRD-81-14: Published: May 12, 1981. Publicly Released: May 12, 1981.

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GAO was asked to review a contract awarded by the Army Communications Research and Development Command (CORADCOM), Fort Monmouth, New Jersey, for the Joint Interface Test System and the entire scope of the Army Communications and Electronics Material Readiness Command (CERCOM) acquisition activity at Fort Monmouth. GAO restricted the review to: (1) assessing whether CERCOM took followup actions designed to correct deficiencies noted in an Army report and assessing the adequacy of these actions; and (2) reviewing the award by CERCOM, CORADCOM, and the Army Electronics Research and Development Command (ERADCOM).

GAO found that CERCOM issued new instructions and instituted organizational changes designed to correct the deficiencies noted in the procurement management review report issued by the Army Material Development and Readiness Command (DARCOM). However, CERCOM has performed insufficient evaluations to determine whether the new instructions and organizational changes have corrected all of the reported deficiencies. CORADCOM and ERADCOM procurement activities did not take appropriate action in three cases to protect the Government from incurring liability for costs that the contractor either offered to absorb or should have absorbed.

Recommendations for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of the Army should direct the Army Material Development and Readiness Command to have its subordinate command, the Army Communications and Electronics Material Readiness Command (CERCOM), promptly review all remaining corrective actions to ensure that the CERCOM implementation has, in fact, corrected the problems.

    Agency Affected: Department of Defense: Department of the Army

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of the Army should direct the Army Material Development and Readiness Command to have its subordinate commands, the Army Communications Research and Development Command and the Army Electronics Research and Development Command, emphasize to contracting officers their responsibilities to protect the Government's interests when (1) contractors either offer cost sharing arrangements or agree to absorb costs; or (2) auditors report that offerors' proposed overhead costs appear to be too low. The Legal Division and Board of Awards should withhold approval until these concerns are properly addressed.

    Agency Affected: Department of Defense: Department of the Army

 

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