Contract Pricing: Threshold for Analysis of Subcontract Proposals Not Clear
NSIAD-92-69
Published: Mar 20, 1992. Publicly Released: Mar 20, 1992.
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Highlights
GAO reviewed the Department of Defense's (DOD) management of subcontracts, focusing on whether procurement officials make consistent and uniform interpretations of the dollar threshold at which prime contractors are required to submit cost or price data analyses for prospective subcontracts.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Defense Acquisition Regulatory Council to clarify the regulatory threshold at which prime contractors are required to analyze prospective subcontractor cost or pricing data and provide the results to the government before prime contract price agreement. |
DOD has proposed a Federal Acquisition Regulation change to the Civilian Agency Acquisition Council for the purpose of clarifying the regulatory threshold. Final action is awaiting agreement on the exact wording change.
|
| Department of Defense | The Secretary of Defense should request the Inspector General to evaluate, in conjunction with the congressionally mandated review of the effects of the threshold increase in the Truth in Negotiations Act, the effects of alternative potential thresholds for analysis of prospective subcontract data before prime contract price agreement. |
DOD disagrees with the GAO recommendation to review "alternative potential thresholds." DOD has stated that the threshold will be $500,000. Therefore, DOD believes that an IG review of compliance with the stated threshold would be more productive.
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Topics
Contract administrationContract costsContract negotiationsCost analysisDefense cost controlDepartment of Defense contractorsProcurement regulationsQuestionable procurement chargesSubcontractorsSubcontracts