Better Management Needed in DOD To Prevent Fraudulent and Erroneous Contract Payments and To Reduce Real Property Maintenance Costs

The Department of Defense (DOD) says it is providing the maximum maintenance, repair, and minor constuction of its real property possible with the resources available; about half of the work is accomplished through contracts. Valid maintenance requirements have been identified faster than funds become available. As a result, the backlog of work not done was due to a lack of resources.

At 10 Army, Navy, and Air Force installations, GAO found that some contractors had been substantially overpaid. Because the installations' inspection and payment verification procedures were inadequate, they paid for work not done, for inferior quality work, and for the same work more than once. Effective inspection procedures and internal control could have prevented or provided early detection of these overpayments. Most overpayments occurred on "unit price" contracts. Since these contracts often require physically measuring the quantity of work done, they are more difficult to administer and more susceptable to intentional or unintentional overcharges than lump-sum contracts which provide fixed prices for specific jobs. Military installations could further reduce maintenance and repair costs by improving their contracting methods and procedures.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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