Need for DCAA To Improve Both the Reporting of Audit Results and the Management of the Defective Pricing Program

GAO reviewed the Defense Contract Audit Agency's (DCAA) defective pricing audits of contracts and subcontracts for compliance with the Truth in Negotiations Act.

GAO found that defective pricing policies, procedures, and audit guidelines are generally adequate although the reports did not comply with DCAA and GAO reporting standards. The DCAA regional offices reviewed were generally complying with the DCAA defective pricing activities and were doing a good job recommending price adjustments. After GAO suggested that DCAA needed to provide better and more accurate disclosure on the limitations of its audit work, DCAA officials initiated actions to ensure compliance with the standards. GAO noted that many branch and resident offices in the regions reviewed had found little defective pricing, and these results were well below regional averages. Therefore, GAO suggested that regional directors should evaluate branch and resident offices' performances where their findings fall below regional averages to determine the causes and initiate actions.