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Contract Pricing: Economy and Efficiency Audits Can Help Reduce Overhead Costs

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Report Type Reports and Testimonies
Report Date Oct. 30, 1991
Report No. NSIAD-92-16
Subject
Summary:

The Defense Department's (DOD) use of overhead should-cost reviews, cost-monitoring reviews, and operations audits has decreased to the point that the agency's efforts no longer reflect the Deputy Secretary of Defense's emphasis on the importance of these analytical tools. Although these tools have uncovered significant unnecessary overhead costs, DOD officials said that they have not sustained their review effort because of inadequate staffing or a shift in emphasis to other types of work. At the same time, overhead rates may continue to increase, as they have since 1987, if the cost of DOD acquisitions continue to decline in the 1980s. Unless DOD renews emphasis, these reviews may decline further as the agency's acquisition work force is cut.

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