Defense Dept.: Contracting personnel may be wasting billions due to FAR regulation confusion

A new report from the U.S. Department of Defense found that Navy and Marine Corps contracting personnel may be subjecting billions of dollars to waste due to non-compliance with cost reimbursement regulations.

According to the department’s internal watchdog, of 170 contracts reviewed, valued at about $7.7 billion, 135 of them, valued at about $7.54 billion were in question because contracting personnel did not consistently implement the Federal Acquisition Regulation (FAR) revision, called the interim rule.

“As a result, contracting personnel continue to issue cost-reimbursement contracts that may increase DoD’s contracting risks because cost-reimbursement contracts provide less incentive for contractors to cut costs,” the Inspector General wrote in the report.

However, contracting personnel argued that the filing mistakes were not done intentionally, and were the result of workers not knowing about or understanding the interim rule.

The watchdog recommended that the Naval Sea System Command headquarters and Naval Supply Center-San Diego emphasize FAR revisions to contracting personnel as well as several other reforms.

Administrative officers agreed with the department’s recommendations and intends to establish reforms and better communication with contractors to ensure the funds are properly recorded.