National Cancer Institute's Management of a Prime Contract With Tracor-Jitco

The National Cancer Institute (NCI) has a contract with Tracor-Jitco, Inc. to manage the Institute's bioassay activities as to its carcinogenic programs. GAO reviewed the contractor's work and also the agency's monitoring of Tracor-Jitco's work. The National Cancer Program was begun in 1971 to identify carcinogenic hazards. It provided the context for the contract award. Pursuant to the arrangement established in 1974, the contract has subcontracted with laboratories to perform bioassays, a function formerly performed by NCI. The original contract, awarded competitively, ran from March 1974 to May 1975, at a cost of about $6.6 million. Since then, the contract has been modified several times without competition and with increases in the cost. After the first contract year, the amount rose to $41.3 million, to include a heavier workload and broadened responsibilities. NCI justified its noncompetitive modification by citing the importance of having a contractor able to provide support for all aspects of bioassay activities and the difficulty of severing the connection between past and ongoing work. The contract provides for reimbursing the contractor for costs in addition to a fixed fee, with the opportunity to receive an award fee dependent on the agency's satisfaction with performance. Present plans are to extend the contract for an additional 4 years at a cost of $65 million, including about $3.3 million in award fees. NCI monitoring of the contractor's management of bioassay activities was inadequate, judging from the Institute's ignorance of various laboratory deficiencies and measures taken to correct them. This was not prudent management because it relied on the contractor to report problems affecting the amount of profit it could earn. The Secretary of Health, Education, and Welfare should require the NCI Director to make more frequent site visits to subcontractor laboratories to verify that deficiencies have been corrected, and to use this information in determining the size of the award fee. NCI has already required the contractor to report fully on inspection visits to subcontractors and assigned additional personnel to support this activity.