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Navy Shipbuilding: Allegations of Mischarging at Bath Iron Works

NSIAD-91-85 Published: Jul 05, 1991. Publicly Released: Jul 08, 1991.
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Highlights

Pursuant to a congressional request, GAO reviewed the Navy's efforts to address an anonymous source's allegations of improper charges and other contractual issues at the Bath Iron Works Corporation (BIW), a Navy shipbuilding contractor.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Navy The Secretary of the Navy should, in conjunction with the Defense Contract Audit Agency and BIW, provide improved controls over the BIW charging system. This would include a combination of better data on contract charges as well as extensive monitoring of contract charges through employee floor checks.
Closed – Implemented
The agency and contractor have taken some actions in response to the two recommendations in the report. The contractor had begun to implement more oversight procedures. However, during work on a recent unrelated review at Bath Iron Works, it was noted that some oversight activities were no longer practiced. Only the use of the new automated time-and-attendance system was evident. Before work to test and verify this issue could be started, however, the review at Bath was terminated. Also the recent sale of Bath to General Dynamics will likely result in its changing its financial and accounting system to bring them in line with procedures used at Electric Boat.
Department of the Navy The Secretary of the Navy should review and strengthen oversight activities at BIW through measures such as increased monitoring activities, prompt attention to contract management issues, and improvements in internal controls.
Closed – Implemented
The agency and contractor have taken some actions in response to the two recommendations in the report. The contractor had begun to implement more oversight procedures. However, during work on a recent unrelated review at Bath Iron Works, it was noted that some oversight activities were no longer practiced. Only the use of the new automated time-and-attendance system was evident. Before work to test and verify this issue could be started, however, the review at Bath was terminated. Also the recent sale of Bath to General Dynamics will likely result in its changing its financial and accounting system to bring them in line with procedures used at Electric Boat.

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Topics

Construction costsContract costsContract modificationsContract oversightContractor paymentsInternal controlsInvestigations by federal agenciesLabor costsNaval procurementShipyards