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NSIAD-83-54 1 (1983-10-11)

handle is hein.gao/gaobabnes0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON. D.C. 20546 NATIOA, SICU AM 11 OCT 1983 INTINtEAS ONAL MPFAORJ ONVI1ION General Donald R. Keith Commander, U.S. Army Material Development and Readiness Command 5001 Eisenhower Avenue Alexandria, Virginia 22333 Dear General Keith: Subject: More Effective Use of Audit Reports Needed to Reduce Contract Costs (GAO/NSIAD-83-54) We have completed a review of M1 Tank Program Office contract administration practices under contracts DAAK30-77-'-0006 and DAAK30-77-C-0007 awarded to Chrysler Defense, Incorporated. Contract DAAK30-77-C-0006, awarded in 1976, initially provided for the first and second years' procurement of M1 production tanks on a fixed-price incentive basis. Contract DAAK30-77-C-0607, awarded in 1977, is a manufacturing, engineering, tooling, special test equipment, and facilities cost-plus-fixed fee contract to prepare for the production of the M1 tank. Both contracts ran concur- re ntly. Our overall objective was to determine the appropriateness of the M1 contracting officer's actions on Defense Contract Audit Agency (DCAA) reports on progress payment overcharges to contractors and misallocated contractor costs on M1 contracts. Additional objectives included determining whether the M1 contracting officer (1) followed sound and reasonable contract administration practices and (2) acted appropriately on DCAA audit reports to mitigate the cost impact of any contractor progress payment overcharges and contractor misallocated contract costs. We made our review at the M1 Tank Program Office and at the U.S. Army Tank Automotive Command (TACOM), both in Warren, Michigan. We examined contract files, audit reports, and working paper files. In addition, we held discussions with contracting officials and resident auditors at the Lima Army Tank Center in Lima, Ohio, and at the Detroit Army Tank Plant in Warren, Michigan. This review was performed in accordance with generally accepted government auditing standards. Details of our review are included in enclosure I. In summary, we found that the M1 contracting officer did not take prompt and effective action on 23 DCAA audit reports issued from (942176) 0%7 65

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