Army Procurement

Pursuant to a congressional request, GAO reviewed the Army's contract for Directorate of Logistics support services at Fort Eustis, focusing on the: (1) comparison of estimated in-house and contractor costs; (2) cost growth since the contract award; and (3) fort's use of a cost-plus-award-fee contract instead of a fixed-price contract.

GAO found that the fort: (1) upwardly adjusted several bids which it felt the contractor understated, bringing the most probable cost estimate to $32.6 million; (2) failed to consider all probable costs in its comparison, causing it to overestimate contracting savings by about $6.4 million; (3) did not negotiate or resolve other bid prices that its Source Selection Board identified as questionable or ensure that contract provisions would control future costs in these areas; (4) would have saved about $600,000 by performing the services in-house; and (5) did not comply with the Federal Acquisition Regulation (FAR) that it obtain the data it needed to conduct follow-on procurements on a fixed-price basis. GAO also found that the: (1) contractor's revised bid increased its first-year option costs from $6.1 million to $8.9 million; (2) overall contract experienced cost growth of 70 percent, from $28 million to $47.5 million; and (3) fort improved its new Directorate of Logistics solicitation and evaluation procedures by setting a minimum number of labor hours per person and a general and administrative expense rate cap and verifying specific costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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