In May 1973 the National Cancer Institute (NCI) renewed, for 18 months, a sole-source contract with the Eppley Institute for cancer research. Since the $3.4 million renewal, the contract has been modified several times so that, as of November 1977, 36 months and $9.4 million have been added to the contract period and cost. NCI awarded a 1-year, $3.6 million extension to the contract in November 1977.

In renewing the contract, NCI used an ad hoc group to make technical reviews of the proposal rather than the standing committees chartered for this purpose. Recommendations were apparently disregarded in negotiating the scope and amount of the contract, and justification for noncompetitive procurement was not based totally on facts. Problems identified in contract administration and performance were: contract monitoring was ineffective; the contractor did not fulfill reporting obligations; Eppley officials carried out and financed 11 projects with contract funds without obtaining initial formal approval; Eppley made charges to contract funds for personnel, laboratory animals, supplies and equipment which were not used for contract work or were not adequately controlled; and Eppley received approval to refurbish its breeding facility which was breeding more animals than were needed for research. Eppley has taken some action to reimburse the contract for noncontract costs. A review of the contract by the Department of Health, Education, and Welfare (HEW) Audit Agency is under way.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Recommendation for Executive Action

Recommendation: The Secretary of HEW should: require that the audit of the Eppley contract cover matters relating to improper use of Federal funds and equipment and obtain appropriate corrective actions; require that NCI officials obtain and analyze data on the need for research animals at Eppley before approval is given to refurbish the animal farm; provide for necessary inventory controls and use of equipment and personnel under contract funds; require that recommendations of scientific reviewers, a management group, and auditors be used in negotiating a budget for future work; require that noncompetitive procurement be based totally on facts; require that the contractor's budget proposal contain data on each proposed project; and consider adding provisions to any future contract to clearly state conditions for project approval, personnel use, contract modifications, and inventory control. For future contract work with Eppley, the Secretary of HEW should improve contract monitoring and administration.

Agency Affected:

Status: Closed

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