More Effective Use of Audit Reports Needed To Reduce Contract Costs

Gao ID: NSIAD-83-54 October 11, 1983

GAO reviewed the M1 Tank Program Office's contract administration practices for the first 2 years' procurement of the M1 tank. Specifically, GAO commented on the M1 contracting officer's actions regarding Defense Contract Audit Agency (DCAA) audit reports on progress payment overcharges to contractors and misallocated contractor costs on M1 contracts.

GAO found that the contracting officer did not take prompt and effective action on 23 DCAA audit reports which questioned the allocation of about $32 million of contractor costs and excess progress payments totaling about $12 million. GAO believes that an immediate response to these reports would have prompted the contractor to resolve the findings as quickly as possible and would have avoided overpayments and lessened the Government's interest payments. GAO noted that contract administration problems may be attributable in part to the complex M1 procurement process and the pressures to meet schedules for the development, initial production, and fielding of the M1 tank.

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.

Director: Henry W. Connor Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-4141


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