Questions Continue as to Prices in Contracting for Architectural-Engineering Services Under the Environmental Protection Agency Construction Grants Program

CED-78-94: Published: Jun 6, 1978. Publicly Released: Jun 6, 1978.

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Payments to consulting engineers under Environmental Protection Agency (EPA) grants for municipal waste treatment plant construction may comprise about 10 percent of total program costs. In 1975, EPA issued regulations for procurement of architect-engineering (A/E) services which prohibit contracts to firms which base profits on constructions costs, allow fixed-price contracts only when work can be clearly defined, and require grantees to negotiate contract terms with contractors.

In spite of these regulations, contracting problems have continued. EPA does not have the authority to require renegotiation of contracts which contain methods which are now prohibited. EPA and grantees rely mostly on cost data submitted by A/E firms, there is little control over projects by grantees, and the grantees do not have sufficient knowledge to assess costs charged by firms. Review by EPA regional offices is limited and inconsistent; they generally review only contracts of over $100,000, and grantees are not given guidance for reviewing contracts at or below noncompetitive contracts.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, EPA, should: (1) develop guidelines for grantees to use in reviewing A/E contract proposals of $100,000 or less; (2) emphasize to grantees that hiring of personnel to perform cost reviews is permitted under the regulations; (3) revise EPA regulations to clearly define the procedures for reviewing A/E contracts over $100,000; (4) develop and issue guidance on fair and reasonable profits to be allowed in the contracts; and (5) develop a program to review contracts under $100,000 on a selected basis to determine the adequacy of grantee reviews of proposals.

    Agency Affected:

 

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