Overhead Costs: Costs Charged by McDonnell Douglas Aerospace's Space
Station Division (Letter Report, 06/23/94, GAO/NSIAD-94-150).

In reviewing $3.6 million in overhead cost submissions from McDonnell
Douglas Aerospace's Space Station Division for 1991-92, GAO discovered
about $251,000 in unallowable expenses and about $77,000 in
insufficiently documented consultant costs. The Space Station Division's
controls are not adequate to identify and segregate unallowable costs.
Also, the Defense Contract Audit Agency did not perform adequate
transaction testing of the costs included in the company's overhead
submissions. The Space Station Division's overhead submissions also
included about $53,000 for employee state and federal taxes under an
employment referral program, $348,000 in assignment payments to induce
employees to transfer to new work locations, and $1.9 million for
employee education. Clarification of the Federal Acquisition Regulation
on such expenses may be needed.

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

 REPORTNUM:  NSIAD-94-150
     TITLE:  Overhead Costs: Costs Charged by McDonnell Douglas 
             Aerospace's Space Station Division
      DATE:  06/23/94
   SUBJECT:  Overhead costs
             Department of Defense contractors
             Claims settlement
             Internal controls
             Accounting procedures
             Contract administration
             Questionable payments
             Accountability
             Administrative costs
             Financial management

             
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