Supply Contract Terminations: GSA Is Missing Opportunities to Recover
Costs From Vendor Default (Letter Report, 06/15/94, GAO/GGD-94-137).

Although unclaimed costs in individual defaulted contracts can be
relatively small, in the aggregate they can be substantial because the
General Services Administration (GSA) terminates hundreds of supply
contracts annually for vendor default. Previous GAO work revealed that
GSA continues to do business worth more than $1 billion with nearly 300
vendors who had histories of poor contract performance. Total expenses
can mount up due to (1) the costs of acquiring, holding, and disposing
of defective goods; (2) replacement product price increases when GSA has
to pay higher prices to obtain replacement products; and (3) GSA
administrative costs, such as staff time. Lack of management emphasis
and complete, reliable data on the universe of defaulted contracts and
associated costs have caused GSA to miss opportunities to pursue claims
against defaulted vendors to recover costs. Also, poor claims
administration has impaired GSA's ability to account for and collect on
the amounts due on claims it does assess. Although GSA is trying to
improve its management and oversight of the claims process, additional
steps must be taken to better ensure that claims to recover costs linked
to vendor default are identified, assessed, and collected.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-137
     TITLE:  Supply Contract Terminations: GSA Is Missing Opportunities 
             to Recover Costs From Vendor Default
      DATE:  06/15/94
   SUBJECT:  Federal procurement
             Contractor performance
             Financial management
             Federal supply systems
             Management information systems
             Contract termination
             Government collections
             Contract administration
             Claims settlement
             Refunds to government

             
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