Missile Defense Agency (MDA) contracting officials negotiated the $1 billion contract without considering the results of an audit performed by Defense Contract Audit Agency (DCAA). If MDA officials had considered the DCAA results, the Government could have negotiated a significantly lower contract value and thereby saved millions of dollars in reduced contract fees. Although MDA officials had requested a DCAA audit, they did not wait for the results and withheld key information from DCAA. MDA officials also did not consider the impact of the contractor’s business system deficiencies, as Federal Acquisition Regulation requires.
In addition, MDA officials failed to withhold approximately $73 million from the contractor’s billings. Report.