Overhead Costs: Unallowable and Questionable Costs Charged by Government
Contractors (Testimony, 03/03/94, GAO/T-NSIAD-94-132).

Defense contractors continue to bill the federal government for millions
of dollars in questionable "overhead" costs each year, including liquor,
overseas trips, golf outing, and baseball season tickets. GAO reviewed
eight defense contractors: six small contractors with annual government
sales ranging from $11 million to $107 million and two major contractors
each with annual government sales topping $1 billion. GAO found that all
eight contractors had included unallowable costs in their overhead
claims. For example, in addition to nearly $1 million in costs
identified by the Defense Contract Audit Agency at the six small
contractors, GAO identified another $2 million in overhead costs that
were either expressly unallowable or questionable. GAO believes that the
government needs to clarify its regulations on such costs as
entertainment and employee morale and welfare, look into capping the
expenses that contractors can charge for certain overhead costs, and buy
more commercial products as a way to move from cost-based contracting
toward market-determined prices.

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

 REPORTNUM:  T-NSIAD-94-132
     TITLE:  Overhead Costs: Unallowable and Questionable Costs Charged 
             by Government Contractors
      DATE:  03/03/94
   SUBJECT:  Overhead costs
             Defense procurement
             Questionable payments
             Department of Defense contractors
             Contract costs
             Procurement regulation
             Administrative costs
             Contract administration
             Defense cost control
             Contractor payments

             
------------------------------------------------------------------------

We regret that electronic text of GAO Testimony is not available at 
this time. 

See the GAO FAQ - Section 2.0 for printed copy ordering information.
The FAQ is automatically retrieved with all WAIS search results or 
can be obtained by sending e-mail to: [email protected]