Review of NASA Contract To Determine Procedures Used in Negotiating Noncompetitive Contracts

A contract awarded to a firm by the Marshall Space Flight Center was reviewed as part of a survey of procedures and practices used by civil agencies to negotiate noncompetitive contracts with prices exceeding $100,000. The Truth in Negotiations Act requires that, with certain exceptions, contractors are required to submit cost or pricing data in support of proposed prices and to certify at the time of negotiations that data submitted are current, complete, and accurate. The Government has a right to a price reduction if it is determined that the price was increased because the data were not in accord with the certification. If the firm had provided the necessary data concerning the cost reduction studies ongoing at the time of negotiations, there would have been a sound basis for reducing the current price by $83,649. Also, the firm will realize an unanticipated profit resulting from savings on material purchases because the contracting officer at Marshall failed to follow up on recommendations contained in the Defense Contract Audit Agency audit report. A determination should be made as to whether the government is entitled to a price adjustment or recovery of costs attributable to the cost reduction actions under the contract. The importance of obtaining, evaluating, and using current, complete, and accurate cost or pricing data to negotiate noncompetitive contract prices should be emphasized to contracting officials.