NASA Contract Management

Improving the Use of DCAA's Auditing Services Gao ID: NSIAD-94-229 September 30, 1994

This report examines the National Aeronautics and Space Administration's (NASA) management and use of audit support provided by the Defense Department's Defense Contract Audit Agency (DCAA). NASA relies extensively on DCAA to provide audit and financial advisory services on the billions of dollars worth of contracts NASA awards. GAO assesses NASA's (1) need for an enforcement mechanism to deter contractors from claiming unallowable costs, (2) use of DCAA proposal audit services, (3) involvement in audit planning, (4) oversight of contract audit and administration services, and (5) backlog of contracts awaiting closeout.

GAO found that: (1) Congress recently gave NASA authority to assess penalties against its contractors for unallowable cost claims, which amount to millions of dollars; (2) although NASA requested proposal pricing support from DCAA in appropriate circumstances and adequately considered DCAA recommendations, over 70 percent of NASA contracts did not properly document the status of contractors' business systems prior to negotiations; (3) NASA and DCAA have improved communication and audit coordination, but NASA is still not sufficiently involved in the DCAA audit planning process or DCAA audit coverage to ensure that contractors receive appropriate and timely audits; (4) NASA contract audit tracking and follow-up systems are incomplete and not in compliance with guidance; (5) NASA does not make timely resolution decisions on contract audit report recommendations or consistently oversee and document Department of Defense (DOD) audit resolutions on those contracts delegated to DOD; and (6) NASA does not timely close out contracts after work has been completed, which increases its exposure to contractors' financial and internal control problems, delays corrective actions, and could lead to excessive billings on subsequent contracts.

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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