Scope and Methodology

B-258172

Securities and Exchange Commission officials provided us with quarterly

and annual disclosure reports that corporations are required to file.3 These

reports contained information pertinent to stockholder litigation, if any,

against the subject corporation. We also reviewed DCAA audit reports for

the 10 contractors on our list with the highest penalties to determine if

DCAA had questioned the allowability of costs associated with any related

stockholder lawsuits.

Once our list was developed, we sent confirmation letters to 39

corporations in our universe to verify the stockholder lawsuits, legal costs

incurred, and amounts claimed for reimbursement. We received 31

responses that confirmed the number of stockholder lawsuits already

obtained from the other sources. We did not independently verify the

information obtained from the contractors or other sources. We

conducted our review from July 1994 through May 1995 in accordance

with generally accepted government auditing standards.

If you or your staff have any questions about this report, please contact me

on (202) 512-4587. The major contributors were Charles Rey, Assistant

Director; Don Watson, Evaluator-in-Charge; and Jimmy Palmer, Jr.,

Evaluator.

Sincerely yours,

David E. Cooper

Director, Acquisition Policy, Technology,

and Competitiveness Issues

These reports are known as 10Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities

and Exchange Act of 1934 and 10K Annual Report pursuant to Section 13 or 15(d) of the Securities and

Exchange Act of 1934.

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