Inadequate Controls Over DOD Subcontracts Cost Government Millions of Dollars
Abstract
In the past several decades, the changing role of many prime contractors from fabricating weapons and products to integrating work done by subcontractors has resulted in a substantial increase in subcontracting activities. Today, subcontract costs frequently comprise more than 50 percent of prime contract costs. According to DOD reports, subcontracts awarded in fiscal year 1990 totaled about $55 billion--a sum larger than the combined budget authority of the Departments of Transportation ($30.2 billion), Energy ($14 billion), and Interior ($6.7 billion). Because of DOD's growing dependence on subcontractors, subcontract prices are critical in the negotiation of contracts. However, DOD doss not have direct management control over subcontracts because its contractual relationship is with the prime contractors, not the subcontractors. DOD relies, to a great extent, on prime contractors to negotiate fair and reasonable subcontract prices. As a result, there is a need for DOD to ensure that contractors have adequate systems and procedures to preclude inflated subcontract estimates from being negotiated in contract prices.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 22, 1991
- Accession Number
- AD1174777
Entities
People
- Frank C. Conahan
Organizations
- United States Government Accountability Office