'Abnormally High' Profits
The Defense Threat Reduction Agency and contractor Northrop Grumman got hit hard by Pentagon's Inspector General's Office, which recommended canceling a services contract that gives Northrop "abnormally high profit rates," according to a Bloomberg news story.
The contract is worth up to $375 million. Northrop has already received $63 million in orders through the two-year-old deal.
Assistant Inspector General Richard Jolliffe wrote that the "most cost-advantageous step is to terminate the contract,'' according to the story. "There are many companies capable of providing the services required."
Agency officials said they have no plans to heed the advice. Northrop declined to comment, according to the story.
The report was laced with criticism. For instance, the agency agreed to buy new computers for the contractor at a cost of almost $800,000. "We do not consider it good management to use government funds to replace the contractor's computers in the third year of a four-year contract,'' the audit said, according to Bloomberg. Considering that Northrop Grumman "is a large, well- established major defense contractor, we consider it unconscionable" that the agency agreed to pay the costs, the story said.
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