Pricing of Firm Fixed-Price Noncompetitive Contracts with R. L. Polk and Co.
PSAD-77-144: Published: Jul 22, 1977. Publicly Released: Jul 22, 1977.
- Full Report:
An examination of the pricing of two firm fixed-price noncompetitive contracts, H-3837 and H-2605, awarded by the Department of Housing and Urban Development (HUD) to R. L. Polk and Company, showed that contract H-3837 was overpriced by more than $734,000. This occurred because cost data available prior to contract negotiations were not used by the contracting officer to negotiate the contract price, and cost or pricing data were not obtained to support the price proposed for contract H-2605.
Although the HUD auditor and the price analyst questioned cost data in the proposal for contract H-3837, the contracting officer disregarded their recommendations and accepted the contractor's negotiation position that the price proposed was reasonable. The contracting officer for contract H-2605 did not comply with the regulations in that he did not require Polk to submit cost or pricing data in support of its cost proposal. He also did not request a preaward audit of the proposal.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HUD should: emphasize to contracting officials the importance of obtaining, evaluating, and using cost or pricing data to negotiate noncompetitive contract prices, including prices proposed on the basis of commercial catalogs where it is determined that the catalog prices are not reasonable; determine whether the Government is entitled to a price adjustment under contract H-3837; and take action to provide sufficient leadtime for proper evaluation of contract prices before contract award.