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DOCUMENT RESUME
02331 - (A1452459]
Contractor Pension Plan Costs: More Control Could Sava
Department of Defense Millions. PSAD-77-100; B-146991. May 19,
1977. 83 pp.
Report to the Congress; by Elmer B. Staats, Comptroller General.
Issue Area: Federal Procurement of Goods and Services:
Reasonableness of Prices Under Negotiated Contracts and
Subcontracts (1904).
Contact: Procurement and Systems Acquisition Div.
Budget Function: National Defense- Department of Defense -
Procurement & Contracts (058) ; Income Security (600).
Organization Concerned: Department of Defense; Cost Accounting
Standards Board.
Congressional Relevance: House Committee on Armed Services;
Senate Committee on Armed Services; Congress.
Authority: Employee Retirement Income Security Act of 1974. P.L.
91-379. Internal Pevenue Code of 1954, as amended.
The Government incurred pension plan costs that were
inequitable and too high because the Department of Defense
permitted actuarial assumptions or unjustified changes in
actuarial cos t methods. Findings/Conclitsions: Government
controls and surveillance over contractors* pension plan
practices were not adequate considering the costs involved.
Establishing effective controls and surveillance over these
practices could save the Government millions of dollars.
Department of Defense auditing and contracting activities also
lacked personnel with actuarial skills to evaluate pension plan
costs. Properly implementing the existing requirements of the
Cost Accounting Standards Board and the proposed standard on
pension plan costs should prevent the increased costs.
Recommendations: The Secretary of Defense should have the Armed
Services Procurement Regulation (ASPR) revised to require that
pension plan costs charged to the Government (1) are equitably
distributed between Government and commercial work when
different actuarial cost methods are used, (2) reflect
allocation of pension fund assets in proportion to
contributions, and (3) are alloca'ed by using assumptions based
on aivision or cost center experience instead of compaDywide
experience. The ASPR should also be revised to require that any
changes in the policies and procedures affecting allocation of
pension plan costs be completely disclosed. (Author/SC)](ViewImageLocal?handle=hein.gao/gaobaachj0001&div=1&collection=&method=preview&ext=.png&size=3)