Improvements Needed in Evaluation of Cost Proposals and Technical Administration of Management Support Services Contracts

To review the processes used by the Department of Defense (DOD) for assuring the reasonableness of contractor proposals and contract charges for negotiated management support service contracts, GAO examined various cost plus fixed-fee contracts awarded by four DOD contracting offices in fiscal year 1979. Ten of the contracts were sole-source awards.

GAO found that, except for one competitively awarded contract, there was no documentation in Government files that showed how technical evaluators arrived at their conclusions that labor costs and other direct costs proposed by the contractors were fair and reasonable. Further, GAO found technical contract administration to be generally weak. Neither the contracting officers nor the contracting officers' technical representatives (COTR's) were aware of what GAO believed to be apparent violations of contract clauses, such as the substitution of personnel and the use of consultants without the prior knowledge and approval of the contracting officer. The COTR's maintained that they had not received instruction in their duties and that they had little understanding of their authority or responsibility in performing the technical administration of the contracts. The COTR'S also did not verify whether costs which were submitted for reimbursement were consistent with the progress of the work. In five of the contracts, permission to use outside consultants had not been obtained, and consultant costs were hidden. GAO suggested that technical evaluators should document their evaluation of contractor proposals so that supervisory personnel could be assured that an adequate evaluation was done. Guidance should be disseminated that would enable technical evaluators and contract administrators to vary the depth of their involvement with the dollar value of the contract, and COTR's should be given sufficient training and guidance to adequately discharge their responsibilities.