Defense Contract Pricing
[Technical Report, Other]
GOVERNMENT ACCOUNTABILITY OFFICE WASHINGTON DC
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In fiscal year 1991, the Department of Defense DOD reported spending almost 150 billion contracting for goods and services-nearly two and a half times the combined purchases of all federal civilian agencies. Even though defense spending is expected to decrease, contracting costs are not expected to fall below 100 billion over the next several years. A substantial share of these expenditures involve negotiations between DOD and contractors. In an attempt to ensure that contractors offer fair and reasonable prices, the law requires that they provide the government with cost or pricing data to support their proposed prices and to certify that this information is accurate, complete, and current. DOD regulations also require major contractors to employ sound cost estimating systems. DOD has the tools to enforce contractors compliance with these and other legislative and regulatory requirements and in some overpricing cases can adjust contract prices. Additional tools include imposing monetary penalties, reducing or withholding progress payments, or deciding not to contract further with contractors who break the rules.
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