Review of NASA Contract

A contract awarded by the Marshall Space Flight Center to the Martin Marietta Corporation, Denver Division, was reviewed as part of a survey of procedures and practices used by civilian agencies to negotiate noncompetitive contracts with prices exceeding $100,000. The review attempted to determine whether the Marshall Space Flight Center required Martin Marietta to furnish current, complete, and accurate cost or pricing data and whether Marshall evaluated and relied on that data in negotiating the contract price. GAO found that, had Martin Marietta provided current, complete, and accurate data concerning cost reduction studies ongoing at the time of negotiations, the contracting officer would have had a sound basis for reducing the price by $83,649. Martin Marietta will realize a substantial unanticipated profit resulting from savings on material purchases because the contracting officer failed to follow up on recommendations contained in the Defense Contract Audit Agency audit report. The Director of the Marshall Space Flight Center should determine whether the government is entitled to a price adjustment or recovery of costs attributable to cost reduction actions under the contract. He should emphasize to contracting officials the importance of obtaining, evaluating, and using current, complete, and accurate cost or pricing data to negotiate noncompetitive contract prices.