Accession Number : ADA301141

Title :   Federally Funded R&D Centers: Use of Contract Fee by the Aerospace Corporation.

Corporate Author : GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL A FFAIRS DIV

PDF Url : ADA301141

Report Date : SEP 1995

Pagination or Media Count : 17

Abstract : Aerospace spent $11.5 million, or 74 percent, of its $15.5 million fee for research. It spent the remaIning $4 million for capital equipment purchases, real and leasehold property improvements, and unreimbursed expenses. Even though the AIr Force and Aerospace discuss Aerospace's specific fee needs and intended use as a basis for fee award, the contract contains the total fee amount. Once the Air Force awards the fee, Aerospace exercises some discretion over how to spend it and other sources of corporate funds, such as interest income and fee from other contracts. The manner in which Aerospace spends its corporate funds in a given year can affect how much Air Force fee is needed in the following year. In May 1995, the Department of Defense (DOD) issued a report to the Congress on fee management at defense FFRDcs. The report focused on ways to limit the use of fee. It recommended, among other things, that (1) defense FFRDC fee amounts be based on the contracting officer's determination of fee need and not on the application of weighted guidelines,2 (2) all allowable and allowable costs be moved from fee to the cost reimbursement portion of the contract, and (3) guidance be developed regarding what costs are to be considered ordinary and necessary to the operation of an FFRDC. DOD has indicated that it is working to improve the fee management process based on these recommendations, as well as the most recent GAO and DOD Inspector General work on this issue.

Descriptors :   *CONTRACTS, *FINANCIAL MANAGEMENT, *AWARDS, SOURCES, AIR FORCE, CONGRESS, DEPARTMENT OF DEFENSE, MANAGEMENT, CORPORATIONS, COSTS, AEROSPACE SYSTEMS, PROCUREMENT, DETERMINATION, INCOME, MONEY.

Subject Categories : Administration and Management
      Economics and Cost Analysis

Distribution Statement : APPROVED FOR PUBLIC RELEASE