Contract Management: Recovery Auditing Offers Potential to Identify
Overpayments (Letter Report, 12/03/98, GAO/NSIAD-99-12).

Pursuant to a legislative requirement, GAO reviewed the results of the
Department of Defense's (DOD) demonstration program evaluating the
feasibility of using private contractors to identify overpayments made
to vendors, focusing on: (1) assessing the success of the methods used
to identify overpayments; (2) determining the types of overpayments
identified and the amounts recovered; and (3) identifying factors
limiting the identification or recovery of overpayments and developing
recommendations for improving the process.

GAO noted that: (1) the methods used by the Profit Recovery Group
International (PRGI) to perform recovery auditing resulted in the
identification of $19.1 million in overpayments, as of August 14, 1998,
and efforts to identify additional amounts continue; (2) however,
recoveries of overpayments amounted to only $1.9 million, in large part,
because vendors took issue with some of the overpayments identified by
PRGI; (3) this caused the recovery process to virtually stop for 8
months while the Defense Supply Center, Philadelphia reviewed the merits
of the vendors' issues; (4) the Defense Supply Center, Philadelphia has
concluded that the claims of overpayment are valid, but it has not yet
notified vendors of the final decision regarding their indebtedness; (5)
of $19.1 million in overpayments, $12.4 million was related to cash
discounts not taken or received or deducted at the wrong rate, $2.2
million related to most favored customer terms not received, $1.3
million related to duplicate payments made, and $1.2 million related to
credits for returned merchandise not taken; (6) as of August 14, 1998,
according to PRGI, it had audited about 80 percent of the $7.2 billion
audit base; (7) the fact that the overpayments were made 4 to 6 years
before audit recovery began also made overpayment identification or
recovery challenging; (8) documentation was difficult to retrieve for
both PRGI and vendors, and sometimes it was not available; (9) PRGI also
had considerable difficulty identifying duplicate payments because the
needed information was not retained in the Defense Finance and
Accounting Service payment files; (10) according to PRGI, even though
its contract was awarded in September 1996, it was slow to begin audit
work because of delays in obtaining Defense Finance and Accounting
Service computerized payment files and the time PRGI needed to
understand DOD's procurement and payment processes; (11) PRGI has made
recommendations to the Defense Finance and Accounting Service and the
Defense Supply Center, Philadelphia to reduce future overpayments, but
none have been implemented; (12) PRGI identified about $1.8 million in
overpayments that were outside the scope of its contract, either because
they were not within the fiscal year 1993-95 contractual review period
or because they involved other government agencies; and (13) neither the
Defense Finance and Accounting Service or the Defense Supply Center,
Philadelphia chose to pursue payment recovery or inform the other
government agencies of the overpayments so that they could pursue
recovery and take steps to avoid future overpayments.

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

 REPORTNUM:  NSIAD-99-12
     TITLE:  Contract Management: Recovery Auditing Offers Potential to 
             Identify Overpayments
      DATE:  12/03/98
   SUBJECT:  Contractor payments
             Overpayments
             Refunds to government
             Collection procedures
             Defense audits
             Contract oversight
             Internal controls
             Department of Defense contractors

             
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Cover
================================================================ COVER


Report to Congressional Requesters

December 1998

CONTRACT MANAGEMENT - RECOVERY
AUDITING OFFERS POTENTIAL TO
IDENTIFY OVERPAYMENTS

GAO/NSIAD-99-12

Contract Management

(707315)


Abbreviations
=============================================================== ABBREV

  ALA - American Logistics Association
  DFAS - Defense Finance and Accounting Service
  DSCP - Defense Supply Center, Philadelphia
  DOD - Department of Defense
  FAR - Federal Acquisition Regulation
  PRGI - Profit Recovery Group International

Letter
=============================================================== LETTER


B-280221

December 3, 1998

Congressional Committees

The Fiscal Year 1996 National Defense Authorization Act required the
Secretary of Defense to conduct a demonstration program to evaluate
the feasibility of using private contractors to identify overpayments
made to vendors by the Department of Defense (DOD).  Authority to
continue and expand the program was provided in the Fiscal Year 1998
National Defense Authorization Act.  The fiscal year 1998 act also
directs us to review the results of the program.  Specifically, it
requires us to (1) assess the success of the methods used to identify
overpayments and (2) determine the types of overpayments identified
and the amounts recovered.  We also identified factors limiting the
identification or recovery of overpayments and developed
recommendations for improving the process. 


   BACKGROUND
------------------------------------------------------------ Letter :1

For both private industry and government agencies, some payments are
processed incorrectly for a variety of reasons.  For instance,
vendors make pricing errors on their invoices, forget to include
discounts that have been publicized to the general public, neglect to
offer allowances and rebates, miscalculate freight charges, and so
forth.  These mistakes, when not caught, result in overpayments. 

Identifying and recovering overpayments is referred to as recovery
auditing.  Recovery auditing started about 30 years ago, and it is
used in several industries, including the automobile, retail store,
and food service industries, and within DOD, by the Army and Air
Force Exchange Service and the Navy Exchange Service.  An external
audit recovery group may be the only group used by an organization or
it may be used in combination with an internal group that examines
invoices for overpayments prior to an external group's review. 

The demonstration program began in September 1996, when the Defense
Supply Center, Philadelphia (DSCP), competitively contracted with
Profit Recovery Group International (PRGI).  The contract, which has
been extended twice and will end in May 1999, covers purchases made
during fiscal years 1993-95.  It requires PRGI to identify and
document overpayments and to make recommendations to reduce future
overpayments.  PRGI receives a fee of 20 percent of net collected
funds. 

DSCP is the Defense Logistics Agency inventory control point that
procures subsistence items, clothing and textiles, and medicines and
medical supplies for the U.S.  Armed Forces and other non-DOD
customers, such as the Veterans Administration and Job Corps centers. 
Payment for the commodities bought by DSCP and covered under the
demonstration program are made by the Defense Finance and Accounting
Service (DFAS), Columbus, Ohio.  DFAS does not typically review these
types of items for overpayments. 

In late 1997, Congress authorized expansion of the program to other
payments managed through the Defense Business Operations Fund and DOD
is examining how to implement the congressional direction.  In an
August 1998 memorandum, the DOD Comptroller encouraged DOD agencies
to use recovery auditing as a way to identify and correct payment
problems. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The methods used by the Profit Recovery Group International to
perform recovery auditing resulted in the identification of $19.1
million in overpayments, as of August 14, 1998, and efforts to
identify additional amounts continue.  However, recoveries of
overpayments amounted to only $1.9 million, in large part, because
vendors took issue with some of the overpayments identified by Profit
Recovery Group International.  This caused the recovery process to
virtually stop for 8 months while the Defense Supply Center,
Philadelphia reviewed the merits of the vendors' issues.  The Defense
Supply Center, Philadelphia has concluded that the claims of
overpayment are valid, but it has not yet notified vendors of the
final decision regarding their indebtedness. 

Of $19.1 million in overpayments, $12.4 million was related to cash
discounts not taken or received or deducted at the wrong rate, $2.2
million related to most favored customer terms not received, $1.3
million related to duplicate payments made, and $1.2 million related
to credits for returned merchandise not taken.  As of August 14,
1998, according to Profit Recovery Group International, it had
audited about 80 percent of the $7.2 billion audit base. 

The fact that the overpayments were made 4 to 6 years before audit
recovery began also made overpayment identification or recovery
challenging.  Documentation was difficult to retrieve for both Profit
Recovery Group International and vendors, and sometimes it was not
available.  The Profit Recovery Group International also had
considerable difficulty identifying duplicate payments because the
needed information was not retained in the Defense Finance and
Accounting Service payment files.  Finally, according to Profit
Recovery Group International, even though its contract was awarded in
September 1996, it was slow to begin audit work because of delays in
obtaining Defense Finance and Accounting Service computerized payment
files and the time the Profit Recovery Group International needed to
understand DOD's procurement and payment processes. 

The Profit Recovery Group International has made recommendations to
the Defense Finance and Accounting Service and the Defense Supply
Center, Philadelphia to reduce future overpayments, but none have
been implemented.  In addition, the Profit Recovery Group
International identified about $1.8 million in overpayments that were
outside the scope of its contract, either because they were not
within the fiscal year 1993-95 contractual review period or because
they involved other government agencies.  Neither the Defense Finance
and Accounting Service or the Defense Supply Center, Philadelphia
chose to pursue payment recovery or inform the other government
agencies of the overpayments so that they could pursue recovery and
take steps to avoid future overpayments. 


   SUCCESS OF THE METHODS USED TO
   IDENTIFY OVERPAYMENTS
------------------------------------------------------------ Letter :3

PRGI's methodology involves four key steps.  These steps are (1)
understand the procurement and payment processes for all
transactions; (2) identify the data needed to establish an audit
trail, such as purchase orders/agreements, paid history files,
invoices, receiving information, vendor term files, and data from
procurement files, such as price lists, promotional allowances, and
volume allowances; (3) examine the data using proprietary software to
identify missed discounts, price discrepancies, duplicate payments,
and other overpayments; and (4) generate a hard copy claim, with
supporting documentation, for each potential overpayment. 

In applying this methodology to DFAS payments, PRGI initially focused
on identifying missed discounts and price discrepancies.  PRGI
compared cash discounts and prices offered to commercial customers to
the cash discounts offered to and prices paid by DSCP.  It also sent
letters to vendors requesting current statements of their accounts
with DSCP.  Between March 1997 and July 1998, two separate mailings
were made asking vendors to provide statements of their accounts. 
About 20 percent of the vendors responded, resulting in the recovery
of $1.2 million.  One recovery of $957,000 related to the recall of a
withdrawn immunization serum for which DOD had not taken credit. 

As of August 14, 1998, according to PRGI, it had audited about 80
percent of the $7.2-billion audit base and identified about $19.1
million in overpayments.  Table 1 shows the types and amounts of
overpayments identified by PRGI and recovered by DOD.



                                Table 1
                
                   Types and Amounts of Overpayments
                 Identified and Recovered as of August
                                14, 1998

Type                                            Identified   Recovered
----------------------------------------------  ----------  ----------
Cash discounts
1) Not offered (Discount not offered DSCP but   $7,477,454     $15,840
 offered to commercial customers.)
2) Earned but not taken (DFAS payment system     4,346,307      34,266
 did not override cash discount terms
 specified in contract with more liberal terms
 specified in invoice.)
3) Deducted at wrong rate                          561,731      38,423
======================================================================
Subtotal                                        $12,385,49     $88,529
                                                         2
Overcharge by comparison (Vendor charged DSCP    2,170,909       6,708
 more than its most favored customer.)
Duplicate payment                                1,283,088     246,820
Unposted credit memorandum (As a result of       1,174,748   1,171,514
 returned merchandise, vendor sent a credit
 memo that remained outstanding.)
Accounting error                                   377,866     281,182
Unapplied payment (Payment that the vendor         118,837      72,566
 cannot match to an invoice.)
Price protection (Losses to the value of a          58,571           0
 retailer's inventory, should a vendor reduce
 prices to other retailers.)
Allowances (The vendor gave financial               13,755           0
 considerations in exchange for meeting
 specific requirements, such as advertising or
 promotional sales.)
Interest paid in error                               8,681       2,866
All other errors                                       500         500
Shortage discrepancy (Vendor sent less than            421         421
 the quantity ordered.)
Pending claims (Written, not yet approved by     1,512,535           0
 DSCP.)
======================================================================
Total                                           $19,105,40  $1,871,106
                                                         3
----------------------------------------------------------------------
Source:  PRGI. 


   FACTORS LIMITING THE
   IDENTIFICATION OR RECOVERY OF
   OVERPAYMENTS
------------------------------------------------------------ Letter :4

A number of factors have inhibited the identification or recovery of
overpayments.  Foremost, vendors disagreed with DSCP claims that it
did not receive most favored customer status because it was not
offered cash discounts offered to commercial customers.  As a result,
the recovery process was virtually halted for 8 months while DSCP
reviewed the basis of the vendors' claims.  In addition, because of
the time between the purchases by DSCP (fiscal years 1993-95) and the
audit recovery (fiscal years 1997-98), both PRGI and the vendors had
difficulty finding supporting documentation.  PRGI also had
considerable difficulty identifying potential duplicate payments
because its proprietary software was incompatible with the payment
systems.  Finally, according to PRGI, even though the contract was
awarded in September 1996, PRGI could not begin audit work in earnest
until June 1997, due to delays in obtaining computerized payment
files.  This, in combination with the time required to become
knowledgeable of DSCP procurement processes and DFAS payment systems,
delayed the progress of the demonstration program. 


      VENDORS DISAGREED WITH
      CLAIMS AND PROCESS
---------------------------------------------------------- Letter :4.1

Certain subsistence vendors are designated brand name suppliers
because only the vendors' products are specified for procurement,
precluding competition.  This practice is authorized for purchases of
products bought by DSCP and resold to other government agencies, such
as the Defense Commissary Agency.  In short, a brand name product is
a product desired or preferred by a customer.  Kellogg's Corn Flakes
is an example of a brand name product. 

Because there is no competition, brand name contracts require that
all prices offered the government be as advantageous as the prices
offered the vendor's most favored customer.  This provision expressly
includes quantity discounts, allowances, rebates, special promotions,
and billing advantage.  PRGI interpreted the term billing advantage
to mean that vendors are required to offer the government cash
discounts for prompt payment similar to those offered the vendor's
most favored customer.  PRGI identified cases where the government
was not offered the same "billing advantage," or discount for prompt
payment, as was offered the vendor's most favored customer.  As a
result, claims were written against vendors for cash discounts not
offered.\1 For example, according to PRGI, one vendor routinely
offered a 2-percent discount to its commercial customers if payment
was made within 10 days, but this discount was not offered to the
government.  As a result, a claim of about $187,000 was made against
this vendor. 

As PRGI identified potential overpayments made to brand name
subsistence vendors, it sent letters of indebtedness to them.  Many
vendors protested both individually and through their trade
association, the American Logistics Association (ALA).  The brand
name vendors and the ALA made the following arguments. 

  -- The claims process did not follow the Federal Acquisition
     Regulation (FAR).  Many of the letters of indebtedness were
     signed by the government contracting officer's representative,
     and PRGI responded to vendor questions.  The vendors and ALA
     argued that, according to the FAR, only a contracting officer
     can sign letters of indebtedness and that PRGI should not
     respond to vendor questions. 

  -- Cash discounts were not offered because, historically, DSCP did
     not pay its bills within the discount period. 

  -- DOD did receive most favorable customer prices.  During the
     1993-95 time frame, DSCP contracted for subsistence items that
     it resold to the Defense Commissary Agency for sale in
     commissaries in Europe.  Even though the prices charged by the
     vendors to DSCP may not have reflected most favorable customer
     prices, the vendors and ALA contend that subsequent voluntary
     price reductions provided by vendors to the Defense Commissary
     Agency for promotional purposes effectively reduced item costs
     to most favored customer prices after items were received by the
     commissaries. 

In addition, vendors complained that the tone of the demand letters,
which cited interest penalties, automatic offsets within 30 days, and
liability for civil and/or criminal prosecution under the False
Claims Act, was threatening.  They also believed the 30-day time
period provided to review claims was unreasonable. 

As a result of these concerns, the process of recovering
PRGI-identified overpayments was virtually halted.  PRGI continued to
look for overpayments, but no letters of indebtedness, regardless of
the cause, were sent to vendors.  DSCP spent the next 8 months
reviewing complaints by brand name subsistence vendors.  On April 15,
1998, DSCP concluded that the vendors' concerns were not valid.  As a
result, DSCP decided to pursue the cash discount claims identified by
PRGI.  However, letters representing the final decision on amounts
owed have not been sent to vendors. 


--------------------
\1 Under the Prompt Payment Act of 1982, agencies generally are not
to pay earlier than 7 days prior to the due date unless vendors offer
a discount for early payment. 


      TIME BETWEEN PAYMENT AND
      AUDIT RECOVERY EFFORTS
      CREATE DOCUMENTATION
      PROBLEMS
---------------------------------------------------------- Letter :4.2

The time between the years the payments were made by DSCP (fiscal
years 1993-95) and the date of the recovery audit (fiscal years
1997-98) made finding supporting documentation difficult for both
PRGI and the vendors.  In some cases, documentation was unavailable;
in others, the vendors needed additional time to locate files. 

Although typical recovery auditing occurs within 6 months to a year
of a transaction, the legislative mandate required the audit of
purchases during the fiscal year 1993-95 time frame, 4 to 6 years
before the demonstration program.  As a result, PRGI had difficulty
obtaining documentation from DFAS.  For example, PRGI was unable to
verify any fiscal year 1993 transactions from one payment system
because supporting documentation, including vendor invoice copies,
had been discarded prior to storage.  Consequently, the audit base
for the demonstration program was reduced from $8.9 billion to $7.2
billion. 

Because of the age of the payments, some vendors said that their
documentation had been sent to storage.  Consequently, vendors
received up to 90 days to review DSCP's claims of indebtedness. 


      PRGI HAD DIFFICULTY
      IDENTIFYING DUPLICATE
      PAYMENTS
---------------------------------------------------------- Letter :4.3

PRGI had difficulty identifying potential duplicate payments because
of limitations with its proprietary software.  According to PRGI
officials, payments in the private sector are invoice based, and PRGI
software was developed based on private sector practices.  However,
the DOD payment systems do not retain invoice numbers or invoice
dates.  The DFAS payment systems pay by contract or contract line
item number.  To compensate for these limitations, PRGI manually
sorted through records sent to storage to identify potential
duplicate payments.  According to PRGI, its proprietary software is
being modified to identify duplicate payments given the specialized
nature of DFAS payment systems. 


      DELAYS IN BEGINNING THE
      DEMONSTRATION PROGRAM
---------------------------------------------------------- Letter :4.4

According to PRGI, even though the contract was signed in September
1996, PRGI did not begin audit work in earnest until June 1997, due
to delays in obtaining computerized payment files.  Further, PRGI
personnel needed time to understand DOD's unique procurement and
payment processes, according to PRGI.  For example, one payment
system contains data on about 384,000 contracts and disburses about
$5.7 billion each month.  These affected how quickly PRGI was able to
identify overpayments. 


   RECOMMENDATIONS TO REDUCE
   OVERPAYMENTS NOT IMPLEMENTED
------------------------------------------------------------ Letter :5

According to the contract, PRGI is required to make recommendations
to reduce future overpayments.  In November 1997, and again in April
1998, PRGI published interim reports, with recommendations ranging
from reprogramming payment systems to providing contracting personnel
additional training to help them determine price reasonableness.  For
example, PRGI recommended that DSCP periodically review all vendor
activity by asking vendors the status of their accounts with DSCP. 
PRGI used this technique and recovered $957,000 from one vendor. 
Currently, neither DFAS nor DSCP periodically ask vendors the status
of their accounts.  PRGI also recommended that additional training be
given to contracting personnel to ensure that the types of discounts
and allowances available in the private sector are provided to the
government.  According to PRGI, private sector organizations are able
to reduce future overpayments and strengthen payment processes and
controls by implementing procedures such as those recommended by
PRGI.  To date, the recommendations do not appear to have received a
critical review and none have been implemented by either DSCP or
DFAS. 

DFAS claims that recommendations requiring the reprogramming of
payment systems to reduce overpayments are not feasible due to
funding limitations.  Also, DFAS is consolidating its payment systems
into one payment system, the Defense Procurement Payment System, and
DFAS said that the PRGI recommendations will be incorporated in that
system, currently targeted to come on-line in 2002.  DSCP said it is
waiting until the end of the program before it reviews the
feasibility of implementing PRGI recommendations. 


   ACTION NOT TAKED TO RECOVER
   POTENTIAL OUT-OF-SCOPE
   OVERPAYMENTS
------------------------------------------------------------ Letter :6

One of PRGI's steps in identifying overpayments was to send letters
to DSCP vendors requesting that they provide a statement of their
accounts with the government.  Vendor responses surfaced an estimated
$1.75 million in overpayments that were outside the scope of the PRGI
contract either because they were not within the contractual review
period ($484,000) or the overpayments were related to another
government contract (estimated by PRGI to be $1.27 million). 

Both DFAS and DSCP officials said they had not taken action to pursue
recovery or to inform the other government agencies so that they
could pursue recovery and take steps to avoid future overpayments for
a number of reasons.  Reasons included not knowing the extent of
these overpayments, not having the staff to substantiate their
validity, not having procedures for notifying other federal agencies,
and waiting for possible expansion of PRGI's contract beyond the
fiscal year 1993-95 time frame. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

PRGI, through its methodology, has identified overpayments of $19.1
million and is continuing its efforts to identify additional
overpayments.  This magnitude of overpayments would likely not have
been identified by DFAS without the demonstration program.  However,
government efforts to collect these overpayments have been slow--only
$1.9 million has been recovered--largely because the recovery process
virtually stopped for 8 months, while DSCP reviewed the merits of the
vendors' complaints.  While DSCP has concluded the government's
claims are valid, it has not yet issued letters notifying vendors of
the final decision regarding amounts owed. 

There are a number of steps DOD can take to improve its use of audit
recovery, particularly as it considers using audit recovery at other
DOD activities.  For example, DOD can implement some of the PRGI
recommendations that do not require costly reprogramming of payment
systems and that could preclude future overpayments.  It could
periodically review all vendor activity by asking vendors the status
of their accounts.  PRGI used this technique and recovered $957,000
from one vendor.  DOD could also provide additional training to
contracting personnel to ensure that the types of discounts and
allowances available in the private sector are provided to the
government.  According to PRGI, private sector organizations are able
to reduce future overpayments and strengthen payment processes and
controls by implementing procedures such as those recommended by
PRGI.  Until DOD gives more serious and timely consideration to
PRGI's recommendations, it will likely incur the same types of
overpayments. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :8

We recommend that the Secretary of Defense direct the Comptroller to: 

  -- Focus future audit recovery efforts on the most recent purchases
     to maximize the likelihood that government and vendor
     documentation is available to support overpayment identification
     and recovery. 

  -- Critically review PRGI's recommendations and implement those
     that are cost- effective. 

  -- Consider the extent to which it may be cost-effective to
     undertake moderate internal efforts to identify overpayments
     before turning audit recovery efforts over to an external group. 
     One technique that DOD might find cost-effective is to
     periodically request status of accounts from its vendors. 

  -- Establish a process for dealing with overpayments due other
     agencies. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

In commenting on a draft of this report, DOD concurred with our
recommendations.  DOD said that DFAS has reviewed PRGI's
recommendations to reduce overpayments, and it is in the initial
stages of efforts to implement them.  As we stated in the report, we
believe some of the PRGI recommendations are worthy of immediate
consideration, do not require costly reprogramming of payment
systems, and if implemented, could reduce future overpayments.  We
urge DFAS to move quickly to implement these recommendations.  (DOD's
comments appear in app.  I.)


   SCOPE AND METHODOLOGY
----------------------------------------------------------- Letter :10

To assess the methods used to identify overpayments, we reviewed
PRGI's methodology for determining overpayments and interviewed PRGI,
DFAS, and DSCP officials.  We also obtained the views of recovery
audit users and the vendor community through their trade association,
the ALA.  To determine the types and total amount of overpayments
identified and recovered, we reviewed DFAS and PRGI records. 

To develop recommendations for improving the process by which
overpayments are recovered by DOD, we reviewed the private sector
practices for identifying and recovering overpayments and the
recommendations PRGI made, and considered the factors limiting the
identification or recovery of overpayments. 

We performed our work at the Office of the Secretary of Defense,
Washington, D.C.; DFAS Headquarters, Arlington, Virginia; DFAS
Columbus, Ohio; the Defense Commissary Agency, Fort Lee, Virginia;
the Army and Air Force Exchange Service, Dallas, Texas; the American
Logistics Association, Washington, D.C.; Wal-Mart Stores,
Incorporated, Bentonville, Arkansas; and the S.C.  Johnson Company,
Racine, Wisconsin. 

We performed our work from March 1998 through November 1998 in
accordance with generally accepted government auditing standards. 


--------------------------------------------------------- Letter :10.1

We are sending copies of this report to the Secretary of Defense; the
Director of the Office of Management and Budget; the Commander,
Defense Logistics Agency; the Director, Defense Finance and
Accounting Service; the Commander, Defense Contract Management
Command; and appropriate congressional committees.  Copies will also
be made available to others on request. 

Please contract me at (202) 512-4587 if you or your staff have any
questions concerning this report.  Major contributors to this report
were Charles W.  Thompson, Daniel J.  Hauser, and Myra W.  Butler. 

David E.  Cooper
Associate Director
Defense Acquisitions Issues

List of Congressional Committees

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel K.  Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Floyd D.  Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on National Security
House of Representatives

The Honorable C.  W.  Bill Young
Chairman
The Honorable John P.  Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House of Representatives




(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
============================================================== Letter 

report text appear at the end of this appendix. 



(See figure in printed edition.)


The following are GAO's comments on the Department of Defense's (DOD)
letter dated November 4, 1998. 

GAO COMMENTS

1.  DOD recommends that our planned follow-on expansion of this audit
discuss whether there are any impediments in law or regulation to the
government's adoption of commercial audit recovery practices.  We are
in the planning stages of the follow-on assignment and will consider
DOD's recommendations as we plan our audit work. 


*** End of document. ***