Ambiguous Federal Acquisition Regulation Criteria on Defense Contractors' Public Relations Costs

Gao ID: NSIAD-85-20 October 29, 1984

In connection with its study on the regulation of defense contractors' public relations costs, GAO reviewed the final overhead cost settlements at 12 contracting activities.

GAO found that contractors, the Defense Contract Audit Agency (DCAA), and contracting officers often have differing interpretations on the allowability of certain public relations costs, because the Federal Acquisition Regulation (FAR) contains ambiguous criteria for determining allowable costs. GAO noted that a disagreement between a contractor and DCAA can lead to complex and involved overhead negotiations. GAO further observed that DCAA had questioned $4 million in possible public relations costs at the 12 activities reviewed and that contracting officers resolved the questioned costs inconsistently. GAO believes that the clarification of certain FAR would reduce differences and disagreements, administrative burdens, and unproductive audit time.

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: Paul F. Math Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-4587


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