Comments on a Draft of the Federal Acquisition Regulation

Comments were requested on a draft segment of the Federal Acquisition Regulation concerning the establishment of profit objectives for use in negotiating noncompetitive contracts. The draft was an outgrowth of a recommendation by the Commission on Government Procurement that the Office of Federal Policy (OFPP) should take the lead in the development of uniform government-wide guidelines. The draft segment is opposed by GAO because insufficient emphasis has been given to the return on contractor investment, and inadequate guidance is offered to permit government contracting officials to obtain relatively uniform results. Accordingly, GAO suggests that OFPP withdraw the proposed regulation and develop more detailed approaches with more definitive criteria and procedures to enable contracting officers to determine appropriate profit allowances for contractor's facility capital investments, cost risk, productivity improvements subject to special profit rewards, and other significant elements related to prenegotiation profit objectives.