Summary

GAO provided information on why Defense Contract Audit Agency (DCAA) compensation reviews do not result in more recoveries to the government. GAO noted that: (1) three Department of Defense (DOD) administrative contracting officers expressed concern that the government could not sustain a DCAA finding against a contractor's legal challenge when the wages questioned were negotiated under a collective bargaining agreement; (2) in March 1991, DOD interpreted the Federal Acquisition Regulation to require that compensation claimed by contractors negotiated under a collective bargaining agreement should be considered reasonable, unless the compensation was unwarranted or discriminatory against the government; and (3) the interpretation eliminated the comparability tests for reasonableness that DCAA had previously applied to compensation claims and caused DCAA to drop a large number of unresolved compensation findings that were based on comparability tests.