A contractor can inflate material costs by

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  Failing to disclose discounts and credits
  
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  Using outdated standard costs
  
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  Using small quantity costs to price large quantity purchases
  
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  Subcontracting to or purchasing from affiliated companies at inflated prices
  
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  Failing to disclose residual materials inventory
  
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  Using phantom suppliers to inflate costs
  
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  Failing to disclose changes in “make or buy” decisions
  
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  Estimating costs based on invalid cost allocation methods
  
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  Using unsupported cost escalation factors
  

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  Contractor provides inadequate, inaccurate, or incomplete documentation used to support cost proposals
  
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  Contractor is late in providing, delays providing, or cannot provide supporting cost or pricing data
  
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  Contractor’s cost estimates are not consistent with its prices (i.e., discrepancy between quoted prices and actual prices)
  
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  Contractor uses out-of-date pricing information (e.g., outdated cost schedules) in cost proposals
  
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  Contractor fails to update cost or pricing data when past activity showed that costs or prices have decreased
  
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  Contractor fails to disclose internal documents on discounts, rebates, etc.
  
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  Contractor fails to disclose information regarding significant cost issues that will reduce proposal costs
  

Contractor uses vendors or subcontractors during contract performance that are different from the vendors or subcontractors named in the proposal or contract

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  Materials, supplies, or components that contractor used in production are different than those listed in the proposal or contract
  
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  Contractor delays releasing information that could result in price reductions
  
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  Evidence of falsifications or alterations of documentation used to support cost calculations
  
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  Contractor has unrealistically high profit margins on completed work
  
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  Contractor fails to correct known system deficiencies that lead to defective pricing
  
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  Unqualified personnel developed cost or pricing data used in contractor’s estimating process