Expedited Yearend Contract Award Resulted in Shortcutting Established Regulations and Procedures and Overpricing

MASAD-81-14: Published: Mar 9, 1981. Publicly Released: Mar 9, 1981.

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GAO reviewed a fixed-price contract awarded by the Air Force as part of a nationwide review of negotiated noncompetitive contracts awarded at fiscal yearend by the Department of Defense activities. The review was performed to determine: (1) whether contracting officers followed regulations in negotiating the contract price; and (2) the reasonableness of the contract price in relation to cost or pricing data available to the contractor at the time of contract negotiations.

To avoid a loss in obligation authority, the contracting officer took substantial shortcuts and did not comply with the procurement procedures normally required. Because of these shortcuts: (1) the contractor's price proposal was incomplete; (2) the contracting officer failed to request a required revised proposal; (3) price proposal reviews were waived; and (4) the contract was overpriced because current, accurate, and complete cost or pricing data were not disclosed.

Recommendation for Executive Action

  1. Status:

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

    Recommendation: The Secretary of Defense should (1) reemphasize to contracting officers the requirement to obtain, evaluate, and use cost or pricing data in negotiating noncompetitive contract prices; (2) require the procurement office to establish controls that will preclude future procurement procedure shortcuts; and (3) have the contracting officer consider the information presented herein, along with any additional information available, to determine if the Government is entitled to a contract price adjustment.

    Agency Affected: Department of Defense


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