Contract Management

Although most federal contracts are awarded through competition, the government also buys unique products and services, including sophisticated weapons systems, for which it cannot always rely on competition to get the best prices and values. Instead, it uses a single source for its procurements. In these cases, contractors and subcontractors provide the government with cost or pricing data supporting their proposed prices and certify that the data submitted are accurate, complete, and current, as required by the Truth in Negotiations Act. This ensures that the government has the data it needs to effectively negotiate with the contractor and avoid paying inflated prices. The government can waive the requirement for certified data in exceptional cases. In these instances, contracting officers use other techniques to arrive at fair and reasonable prices. Using the Department of Defense's (DOD) contract database, GAO found 20 waivers, each valued at more than $5 million, in fiscal year 2000. The total value of these waivers was $4.4 billion. In each case, the contract pricing or waiver documents stated that sufficient information was available to determine the price to be fair and reasonable without the submission of cost or pricing data. There was a wide variety in the quality of the data and analyses being used, from very old to very recent data. Despite the range of techniques employed to arrive at a price, DOD does not have guidance that would help buying organizations determine acceptable data and analyses and what kinds of outside assistance, such as contracting and pricing experts, should be obtained.

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.

Director: Team: Phone: