Environmental Cleanup

Observations on Consistency of Reimbursements to DOD Contractors Gao ID: NSIAD-93-77 October 22, 1992

This report provides information on Defense Department reimbursement of defense contractors' environmental cleanup costs. It presents case studies on four locations affecting three large defense contractors: (1) a rocket testing and manufacturing site near Sacramento, California, run by Aerojet-General Corporation; (2) two waste disposal sites near Seattle, Washington, that received hazardous waste from the Boeing Corporation and others; and (3) a former aircraft manufacturing site in Burbank, California, run by Lockheed Corporation.

GAO found that: (1) DOD reimbursed contractors through overhead amounts in prime contracts, subcontracts, and a negotiated settlement; (2) decisions on reimbursement varied from complete denial to reimbursement in proportion to the government's share of a company's business; (3) contracting officers varied widely in the extent of investigations into possible wrongdoing by contractors; (4) federal acquisition laws, regulations, and policies do not provide specific guidance to decisionmakers on how to treat environmental clean-up costs; and (5) the varied types of reimbursements made in the cases examined may not be enough to prevent continued inconsistent reimbursement decisions.

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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