Noncompetitive Fixed-Price Contract Proposals

PSAD-76-30: Published: Sep 29, 1975. Publicly Released: Sep 29, 1975.

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GAO reviewed the techniques used by the Department of Defense procurement personnel to determine the reasonableness of noncompetitive fixed-price contract proposals within the $10,000 to $100,000 range, focusing on whether the government's evaluation of contractors' price proposals was adequate to assure the negotiation of fair and reasonable prices.

GAO noted that: (1) in many of the contracts that GAO examined, the information in the contract file did not support the contracting officer's determination that the price was reasonable; (2) in determining the reasonableness of prices, the contracting officers generally relied on: (a) recommendations by technical personnel, such as engineers from the requisitioning office; (b) comparisons of the price offered to previous prices paid; or (c) other price analysis techniques; (3) the Armed Services Procurement Regulation states that these techniques can be used to determine the reasonableness of price if less than $100,000 is involved; (4) however, these techniques were not always properly accomplished; (5) in many cases recommendations received from technical personnel were not supported and the reasonableness of previous prices, which were used for comparison, had not been established; and (6) in addition, other price analysis techniques used were not adequate to support a reasonableness determination.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Secretary of Defense should reemphasize to all procurement offices the need to adequately analyze noncompetitive price proposals even though relatively small dollar amounts--$10,000 to $100,000--are involved. The Secretary of Defense should distribute copies of this report to all defense procurement offices as an example of matters which should be given special attention during the evaluation of noncompetitive proposals in this price range.

    Agency Affected:


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