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![handle is hein.gao/gaobabjjw0001 and id is 1 raw text is: - to-
% [ /_ - \COMPTPOLLER GENERAL OF THE UNITED $TATEW
WqA!HIFGTON. C.C. 3QUS qf
B]-o2963 Marah 16, .979
Tha Honorable Joseph G. inish ........ Vd ,.:.
ChaIrman, Subcommittee on General
Oversight and Rnegotiation
Committee on Banking, Finance and
Urban Af fairs
House of Representatives
D6ar Mr, Chirman:
This is In response to your request onkMarch.8, 1979, that\We
summarize the iformation that we-obtained on thejj sts, of comfriance
with the Renegotiation Act of 1951, as AmidedJ(50 ,SC.pllIet,
?eg.). Our work w:os conducted ateighf-contractoi, offiQies, two industry
associations, and the RenegotiationBoard, ,This Nprk was perfo ied from
June to'September T977.at the reqvest of SenatorP-,ogmi re't'and lip'lited to
contractors 'and industry associations that had testified at a heaing
iId agreed to make their records available for reviw. Our Specific
obJetivewas to as;certain if, as claimed by cqntraitors; there were sub-
stantial costs incurred for complying'with the requirements of the
Rnegotiatlon Act. We also evaluated'studies preparpd.by Industry asso-
ciations attempting to deter'ine the extent of siuch 4rosts .
In general, we concluded 'that some costs were necessarily itcurred
by'contractors to comply with adnegotiatibn Act requi' 'ments, We were
unable, however, to determine the:magnitude of such cvsts-or to what
extent they'are incremental to other financial data costs,. The primary
problem in determining' and verifying such costs was .th,'t the, contractors
accounting systems were not designed to idenf;fy and segregate such data.
It is important to note that, becatise of unusual a.ipects of;'the firms
that testified before the comttee chair'ed by Senator iroxmire, any con-
clusions drawn fron the data are unlikelytobe represerntatve' of. the
approximately 3,000 firms that file with the Board. Tojillustrate:
One contractor claimed and obtained exemptions for about\75 percent of~i
its otherwise renegotiable sales. Under the Act, contractors, could claim
examptions for standard commercial articles, standard coronercial classes,
and new durable productive equipment for otherwise renegotiable sales to
the Government. This contractor accounted for 8.percent of all exemptionrs
granted to all firms. The large amount claimed was costly to-document. ,
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