Pension Costs to Add Billions to Contracts

March 5, 2012

Agencies face billions in additional contracting costs because of a new federal accounting rule that requires the government to reimburse contractors for a greater portion of employee pension costs.

"From what we have seen, [agencies] don't know exactly how much to set aside for this reimbursement," said Tom Schatz, president of Citizens Against Government Waste. "When you take it across government, the future liability is tens of billions of dollars. It's real money, but apparently it's not on the top of their priority list."

At the Defense Department, additional costs "could be billions of dollars, conceivably," Pentagon Comptroller Robert Hale said on Feb. 23. 

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