Insurance Costs Incurred by Contractors in a 5-Year Period

GAO reviewed insurance costs incurred by four major contractors during a 5-year period and found that the Government incurred unnecessary costs of about $1,237,500 because the military services required the contractors to bear the risk of loss or damage to certain Government-owned parts, materials, inventories, work in process, and special tooling in their possession under fixed-price contracts.

GAO estimates $1,250,000 in costs could have been avoided if the military services had followed the Government's established policy of self-insurance.