Federal Contracting

Loose administration of government contracts has resulted in contractors getting bonuses for mediocre performance and billing agencies for millions of dollars in unallowable or questionable costs, such as employee parties, tickets to sporting events, and liquor. Civilian agencies now spend about $55 billion per year on contracts. Although contractors can play a key role in delivering needed services, once contracts are awarded federal agencies often give short shrift to overseeing the quality and cost of completed work. More thorough and timely contract auditing could help minimize the government's vulnerability to waste, fraud, and abuse. Currently, a significant backlog exists of audits of costs incurred by contractors. Civilian agencies could also beef up their audit effectiveness by clarifying which agency has responsibility for contractor audits, clearly spelling out unallowable and questionable costs, and making clear the government's position on the use of contractor discounts. At the core of contracting problems, GAO has discovered a lack of senior management attention to agency contracting. In some cases, senior officials have remained blissfully ignorant of waste and abuse because agencies have no way of flagging contracting problems. In other instances, senior officials have neither made managers accountable for effective contract administration nor committed themselves to correcting contracting problems that have surfaced.