Contractor Overhead Costs: Money Saving Reviews Are Not Being Done As Directed
NSIAD-94-205
Published: Aug 03, 1994. Publicly Released: Aug 03, 1994.
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Highlights
GAO reviewed the Department of Defense's (DOD) actions in response to a March 1992 DOD directive to increase its should-cost reviews.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | Because DCMC has not responded to the March 1992 instruction on performing overhead should-cost reviews, the Secretary of Defense should re-emphasize the instruction and establish appropriate mechanisms for ensuring that it is carried out in a timely manner. |
DCMC established a structured approach for determining where overhead should-cost reviews should be performed based on specific risk assessment criteria. DCMC assessed 86 contractors for overhead should-cost reviews, including 17 contractors recommended as candidates by the military departments and the National Aeronautics and Space Administration. DCMC determined that it would perform comprehensive overhead should-cost reviews at 2 of these 17 contractors and make in-depth reviews of selected overhead cost drivers at the remaining 15 contractors. Of the additional 69 contractors, DCMC's tentative plans provide for making 5 comprehensive overhead should-cost reviews and 22 in-depth tailored reviews.
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Topics
Auditing proceduresContract costsContract oversightCost analysisDefense auditsDefense procurementDepartment of Defense contractorsOverhead costsProcurement regulationsMilitary forces