Contract Pricing

Pursuant to a congressional request, GAO: (1) evaluated the accuracy of competition statistics the Department of Defense (DOD) included in reports to Congress to determine whether the statistics properly showed the extent of competition in defense procurement; and (2) provided information on contracting officers' use of noncompetitive pricing safeguards to negotiate contracts that DOD reported as competitive.

GAO found that: (1) DOD contracting officers responsible for awarding follow-on and one-bid contracts treated them as noncompetitive contracts and used appropriate safeguards designed to ensure the negotiation of fair and reasonable prices; (2) competition reports DOD submitted to Congress showed an increasing rate of competition in defense procurement; (3) DOD statistics on contract funds associated with competitive actions include follow-on contracts that are generally awarded to current incumbent producers on a noncompetitive basis, and therefore should not be included in DOD competition reports unless they involve the use of competitive solicitation procedures or actually involve competition between two or more responsive, reasonable offerors; and (4) in defining actions completed, the Office of Federal Procurement Policy (OFPP) guidance blurs the distinction between competitive solicitation procedures and actual competition involving more than one bidder and, as a result, reports submitted using OFPP guidance could be misinterpreted, inflating the agencies' success in awarding contracts competitively.