Government Operations:

Bus Service Pricing Allegations

NSIAD-98-148R: Published: Apr 6, 1998. Publicly Released: Apr 6, 1998.

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Pursuant to a congressional request, GAO examined allegations that the Army was overcharged for bus service provided under an acquisition agreement with the Hungarian Ministry of Defense, focusing on: (1) the U.S. statutory requirements governing the acquisition agreement; and (2) GAO's views on the results of two Army reviews of bus service pricing.

GAO noted that: (1) the U.S. Army Europe's Internal Review and Compliance Office and the U.S. Army Audit Agency investigated allegations of overcharges for bus services provided under the Hungarian acquisition agreement; (2) the Internal Review and Compliance Office concluded that the Army was overcharged for bus services because reciprocal pricing arrangements were not followed; (3) the Army Audit Agency concluded that reciprocal pricing provisions did not apply to the bus service contracts; (4) GAO believes that reciprocal pricing did not apply and that the Hungarian Logistics Directorate should have negotiated for the lowest possible cost; (5) neither audit determined whether the lowest possible cost was obtained, and there is no way for GAO to make that determination now; and (6) however, the price variation documented in the Internal Review and Compliance Office's report and the report's discussion of a lower price tender made by one of the bus companies for its services suggest that lower prices may have been available.

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