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Contract Pricing: Economy and Efficiency Audits Can Help Reduce Overhead Costs
Paul F. Math (au)
According to the Dept. of Defense (DoD), overhead costs represent roughly 1/3 of the price that DoD pays for its weapon systems (in 1991). In 1984, the Deputy Sec. of Defense emphasized the need for DoD to reduce overhead costs by using evaluation tools such as overhead should-cost reviews, cost-monitoring reviews & operations audits, each of which measures the economy & efficiency of contractors’ operations. This report reviews these three analytical tools. The objective was to determine the extent to which DoD used them to evaluate the economy & efficiency of contractors’ overhead costs. Charts & tables.
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