Cost of Products Sold to DOD

Pursuant to a congressional request, GAO reviewed the: (1) differences in the costs of products sold to the Department of Defense (DOD) and other federal agencies compared to the costs for similar products sold to commercial customers; and (2) extent that federal procurement laws and regulations contribute to cost differences between the federal government and commercial consumers. GAO found that: (1) officials from 12 companies estimated that they incurred additional costs due to federal procurement laws and regulations and contract specifications; (2) the companies' additional costs averaged 19 percent; (3) several companies estimated that the Truth in Negotiations Act, cost accounting standards, socioeconomic requirements, and technical data rights requirements added to their costs; (4) 7 of the 12 companies estimated that an additional 6 months was required to negotiate a contract with the federal government; and (5) there was no documentation to support the differences in costs for products sold to DOD.