Reference no: EM131862743

You have just received the final audit on a cost reimbursement contract with Space Technologies, Inc. The contractor worked on this R&D contract for 2 years before the money ran out. During this time interim payments were made to the contractor which included indirect expenses. When calculating the payment amounts for indirect expenses, you used a rate of 82%. The final audit calculation shows that actual indirect rates should be 71% for the first year and 69% for the second year. The audit report indicates that the contractor was overpaid by $497,675 for indirect expenses. What are you going to do?