Followup on the December 1981 Dollar Threshold Change for Certified Cost or Pricing Data

GAO was asked to review recent changes in the Truth-in-Negotiations Act, which increased the threshold for the mandatory submission and certification of the cost and pricing data for negotiated procurements from $100,000 to $500,000.

GAO found that file reviews or audits of proposals in the $100,000 to $500,000 range have been cost effective and should be continued. However, GAO stated that it should be clear that the determination of the need for auditing proposals is independent of the statutory threshold for providing certified cost or pricing data. The need for a preaward proposal audit is and always has been required at the discretion of the contracting officer. Nineteen standards were promulgated pursuant to P.L. 91-379 to achieve greater uniformity and consistency in the cost accounting practices of Department of Defense contractors. To the degree that the increased threshold influences contracting officers to forego cost data on fixed-price contracts, the number of contracts that would be exempt from following the standards would increase. GAO is concerned that the threshold change to P.L. 87-653 may reduce the Government's assurance of fair and reasonable prices on negotiated contracts in the $100,000 to $500,000 range.