Commission on Wartime Contracting

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Hearing August 11, 2009

Contractor Business Systems

On August 11, 2009, the Commission on Wartime Contracting met with defense contractors and government officers to discuss contractor business-systems. The hearing explored the challenges that government oversight officials face when contractors’ systems for billing, purchasing, labor, compensation, estimates, and other activities are inadequate for providing complete, accurate, and timely information.

The Commission examined a selection of reports on contractor business systems dealing with some $43 billion of work and learned that half of the systems for billing and compensation had been found "inadequate" by federal auditors. All other categories of business systems in the sample — accounting, budget, electronic data processing, indirect and overhead costing, labor, and purchasing — also showed inadequacies, although to a lesser extent.

As the Commission noted in "At What Cost? Contingency Contracting in Iraq and Afghanistan," its June 10, 2009, interim report to Congress, "Significant deficiencies in contractor systems increase the likelihood that contractors will provide proposal estimates that include unallowable costs or that they will request reimbursement of contract costs to which they are not entitled or which they cannot support."

The business-systems hearing ran from 9:30 a.m. to 3 p.m. on Aug. 11 in Room 342 of the Dirksen Senate Office Building in Washington, DC. Witnesses included representatives from contractors DynCorp, Fluor, and KBR; and the federal Defense Contract Management Agency (DCMA), Defense Contract Audit Agency (DCAA), and U.S. Army Contracting Command.




August 11, 2009 hearing on contractor business systems video Morning Session Afternoon Session
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