Civil Agencies Can Do a Better Job of Negotiating Noncompetitive Contracts Priced Over $100,000

PSAD-79-93: Published: Aug 21, 1979. Publicly Released: Aug 21, 1979.

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A review was made of the practices of 12 executive civil agencies in pricing negotiated noncompetitive contracts over $100,000 when contractors' cost or pricing data were required. The price negotiations reviewed included 61 contracts valued at $33 million that were awarded in fiscal year 1977.

For the 61 negotiations, it was found that: no cost or pricing data were obtained for 15 actions; incomplete cost or pricing data were accepted by the Government for 41 actions; cost or pricing data were obtained but there was no analysis of the data in 14 actions; there was incomplete cost analysis for 11 actions; cost analysis results were not always effectively used in negotiating contract prices; and there was inadequate protection against using defective data. Pricing deficiencies were attributed to: lack of adequate guidance for determining what complete cost or pricing data should include; confusion as to who is responsible for reviewing cost or pricing data for completeness, and what Government activity is responsible for analyzing data for awards to small companies owned by socially or economically disadvantaged persons; contracting personnel not always being well trained in regulations and procedures for pricing and negotiating contracts requiring cost or pricing data; and management controls either not existing or needing to be strengthened.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Administrator of General Services should have the Director, Federal Procurement Regulations: issue better criteria, with examples, as to what is complete cost or pricing data and additional guidance on price negotiation concepts, procedures, and practices; and revise the regulations to clarify who should (1) review the completeness of cost or pricing data and arrange to get any other data needed, and (2) analyze data submitted by subcontractors taking part in the Small Business Administration program for businesses owned by the socially or economically disadvantaged. The Director of the Office of Management and Budget should have the Administrator of the Office of Federal Procurement Policy issue directives requiring that civil departments and agencies develop and use: effective management controls over their procurement operations through (1) indepth staff reviews of proposed contract pricing actions, and (2) effective actions to correct weaknesses reported by departmental or agency procurement management and audit staffs; programs for teaching procurement personnel about price negotiation procedures and practices, including classroom training, individual counseling, and daily supervision; and a program for performing postaward audits to help ensure that cost or pricing data relied on in negotiating contract prices were accurate, complete, and current as certified by contractors. The Secretaries and Administrators of the Federal civil agencies which were reviewed should: coordinate with the Administrator of General Services to obtain guidelines for determining completeness of cost or pricing data and guidance on price negotiation procedures; and ensure that contract negotiators are properly trained.

    Agency Affected:


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