Contract Pricing: Reasons for the Decline in Reported Defective Pricing
(Briefing Report, 04/11/94, GAO/NSIAD-94-144BR).

Defective pricing occurs when a contractor negotiating a price for a
contract anticipated to be over a specified dollar value does not submit
accurate, current, or complete data about the costs included in its
proposal, thus increasing the contract price.  If defective pricing is
discovered, the government has the right to recover the amount of the
overcharge.  In May 1992, GAO reported that the amount of potential
defective pricing on Defense Department (DOD) contracts as reported by
the Defense Contract Audit Agency had dropped for the first time in
years.  This briefing report discusses the reasons for the reduction and
any further declines that might be occurring. GAO focuses on the
three-year period beginning in fiscal year 1990--the peak of the
reported defective pricing--and ending in fiscal year 1992--the latest
year for which data were available.

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

 REPORTNUM:  NSIAD-94-144BR
     TITLE:  Contract Pricing: Reasons for the Decline in Reported 
             Defective Pricing
      DATE:  04/11/94
   SUBJECT:  Department of Defense contractors
             Contract costs
             Defense cost control
             Questionable bid prices
             Defense audits
             Accounting systems
             Costing errors
             Defense procurement
             Contract monitoring

             
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