Contract Management: DOD Pricing of Commercial Items Needs Continued
Emphasis (Letter Report, 06/24/1999, GAO/NSIAD-99-90).
The Defense Department (DOD), with the encouragement of Congress, is
boosting its purchases of commercially available goods and services.
Although commercial purchasing is still relatively small and sole-source
commercial purchasing is even smaller, DOD expects commercial purchases
to increase in the future. It believes that determining fair and
reasonable prices for commercial sole-source items will continue to be
challenging. The Federal Acquisition Regulation (FAR) cautions military
contracting officers not to obtain more information than is necessary to
determine price reasonableness, and it stresses the need to limit
information requests of the contractors. However, contracting officers
may ask contractors to provide sales prices for the same or similar
items, to explain their discount policy, and to supply cost data. The
FAR defines price analysis as the process of examining and evaluating a
proposed price without evaluating its separate cost elements or process.
This report (1) determines the extent of price analysis that DOD
contracting personnel were doing to arrive at fair and reasonable prices
for commercial sole-source items, (2) evaluates how well contract
personnel did price analyses, and (3) determines what guidance and
training was available to help them determine price reasonableness.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-99-90
TITLE: Contract Management: DOD Pricing of Commercial Items Needs
Continued Emphasis
DATE: 06/24/1999
SUBJECT: Defense procurement
Department of Defense contractors
Contract administration
Prices and pricing
Sole source procurement
Commercial products
Defense cost control
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United States General Accounting Office GAO Report
to Congressional Requesters June 1999 CONTRACT MANAGEMENT
DOD Pricing of Commercial Items Needs Continued Emphasis
GAO/NSIAD-99-90 United States General Accounting Office
National Security and Washington, D.C. 20548
International Affairs Division B-280125
Letter June 24, 1999 The Honorable James Inhofe Chairman The
Honorable Charles Robb Ranking Minority Member Subcommittee on
Readiness and Management Support Committee on Armed Services
United States Senate The Department of Defense (DOD), with the
support of the Congress, is increasing its purchases of
commercially available products and services. While the current
level of commercial purchasing is relatively small and sole-source
commercial purchases even smaller, DOD expects commercial
purchases to increase in the future and believes determining fair
and reasonable prices for commercial sole-source items will
continue to be challenging. The Federal Acquisition Regulation
(FAR) cautions DOD contracting officers not to obtain more
information than is necessary for determining price reasonableness
and it emphasizes the need to limit information requests of the
contractor. However, when needed, contracting officers may ask
contractors to provide sales prices for the same or similar items,
an explanation of the contractor's discount policy, or cost data.
The FAR defines price analysis as the process of examining and
evaluating a proposed price without evaluating its separate cost
elements or profit. Price analysis techniques include (1)
comparing proposed prices in response to a competitive
solicitation; (2) comparing a currently offered price to
previously paid prices if both the validity of the comparison and
the reasonableness of the previous prices can be established; (3)
using parametric methods such as dollars per pound or other
measurement units; (4) comparing offers to competitive published
price lists, published market prices, and discount or rebate
arrangements; (5) comparing proposed prices with independent
government cost estimates; and (6) comparing proposed prices with
prices obtained through market research for the same or similar
items. As you requested, we (1) determined the extent of price
analysis DOD contracting personnel were performing to arrive at
fair and reasonable prices for commercial sole-source items, (2)
evaluated how well contract Page 1
GAO/NSIAD-99-90 Contract Management B-280125 personnel performed
price analyses, and (3) determined what guidance and training was
available to assist them in determining price reasonableness. We
reported our preliminary observations during testimony before the
Senate Subcommittee on Acquisition and Technology, Armed Services
Committee, in March 1998. This report supplements the
information presented in that testimony. Results in Brief In 33
of the 65 commercial sole-source purchases we reviewed, price
analysis consisted of comparing the offered price to an offeror's
catalog or price list, and/or to the price(s) the government
previously paid for the same or similar items. Contracting
officers accepted the offered price in 30 of the 33 purchases and
negotiated lower prices in 3 cases (9 percent). In the other 32
purchases, contracting personnel used one or more additional price
analysis tools such as obtaining commercial sales cost
information. Contracting officers accepted the offered price in 19
of the 32 purchases and negotiated lower prices in 13 cases (41
percent). The price analysis performed by contracting personnel
were often too limited to ensure that prices were fair and
reasonable. For example, some contracting personnel believed that
when the offered price was the same as the catalog or list price,
it could be considered a fair and reasonable price. In several
cases, contracting personnel did not use pertinent historical
pricing information contained in contract files that should have
raised questions about the reasonableness of offered prices.
Further, contracting officers, generally, were not using a
discretionary solicitation clause that requires offerors to
provide information other than certified cost and pricing data,
such as sales data, in support of their offered prices. In
addition, some contracting officers paid prices that included
unneeded services. Finally, many contracting officers were not
documenting in the contract file how they determined that a price
previously paid for an item was fair and reasonable and,
therefore, could be relied on in evaluating the currently offered
price. Reasons given for the limited price analysis included
workload burdens and urgent requirements for items. DOD officials
also noted the reduced negotiation leverage that contracting
officers now have when purchasing commercial items in a sole-
source environment. Defense Acquisition: Improved Program Outcomes
Are Possible (GAO/T-NSIAD-98-123, Mar. 18, 1998). Page 2
GAO/NSIAD-99-90 Contract Management B-280125 DOD continues to
provide guidance and training to assist contracting personnel in
contracting for commercial items and in performing sound price
analysis. However, based on our work, DOD's efforts have yet to be
fully understood or embraced by all DOD contracting personnel. In
time, the training should improve their price analysis and
negotiating skills. Also, recent legislation requires increased
guidance for contracting personnel on price analysis tools, the
appropriate use of information other than cost or pricing data,
and the role of support agencies. The guidance should also help
government contracting personnel become smarter buyers in the
commercial marketplace. As of May 1999, regulations to implement
the act had not been published. We are making recommendations to
the Secretary of Defense to improve the price analysis performed
by DOD contracting personnel. Price Analysis
While the FAR grants DOD contracting officers wide latitude on the
type Performed by and extent of price analysis
techniques they can use, contracting officers are required to
perform sufficient price analysis to determine whether Contracting
Personnel offered prices are fair and reasonable. The more
knowledgeable contracting personnel are about the basis and makeup
of commercially offered prices, the better the position they will
be in to evaluate the reasonableness of offered prices. Our review
of 65 commercial sole-source purchases showed that for 33
purchases, price analysis consisted of comparing the price offered
to a catalog or price list, and/or to the price(s) previously paid
for the same or similar items by the government. Contracting
officers accepted the offered price in 30 of these 33 purchases
and negotiated lower prices in 3 (9 percent). For the other 32
purchases, contracting personnel used one or more additional price
analysis tools. For 21 of these purchases, some commercial sales
information was obtained. Depending on the circumstances, sales
information can be useful in comparing the reasonableness of
prices offered by contractors to prices paid by commercial
customers for the same or similar items sold in comparable
quantities. However, in many of the 21 cases, the quantities the
government required were significantly larger than the quantities
reflected in the commercial sales information. Contracting
officers accepted the offered price in 13 of these 21 cases and
negotiated lower prices in 8 cases (38 percent). With regard to
sales information, contracting personnel have another tool
available to them. A 1998 Defense Contract Audit Agency (DCAA)
memorandum emphasized its availability to review sales and other
Page 3 GAO/NSIAD-99-90
Contract Management B-280125 data provided by contractors in
support of their offered prices for commercial items. However,
contracting personnel requested this support for only one of the
purchases we reviewed. A number of contracting personnel told us
they were unaware that this DCAA support was available. For the
remaining 11 purchases, contracting personnel used other pricing
tools such as obtaining cost information. Contracting officers
accepted the offered price in 6 of these 11 purchases, and
negotiated lower prices for 5 purchases. In total, contracting
officers accepted the offered price in 49 of the 65 purchases (75
percent) and negotiated a price reduction in 16 cases (25
percent). Price Analysis Often We found that price
analysis being performed by contracting personnel Limited
were often too limited to ensure fair and reasonable prices. For
example, some contracting personnel believed that when the offered
price was the same as the catalog or list price, it could be
considered a fair and reasonable price. In several instances the
price analysis performed by contracting personnel did not address
pertinent historical pricing information. In addition, some
contracting officers paid prices that included unneeded services.
Further, contracting personnel, generally, were not using a
discretionary solicitation clause that requires offerors to
provide information other than certified cost and pricing data,
such as sales data, in support of their offered prices. Finally,
many contracting officers were not documenting in the contract
file how they determined that a price previously paid for an item
was fair and reasonable and, therefore, could be relied on in
evaluating the currently offered price. While we believe some
price analyses were often too limited, we cannot say whether the
prices would have been different had better price analysis been
performed. Comparing Price Offered to FAR and service guidance
make it clear that contracting personnel cannot Catalog or List
Price simply rely on catalog or list prices in making
a price reasonableness determination. While catalog prices are an
appropriate source of pricing information, contracting personnel
must evaluate catalog prices while considering such things as
quantities to be purchased, delivery times, market conditions, and
sales to other customers. Contracting personnel must do sufficient
price analysis to enable them to determine the reasonableness of
an offered price and to document the results of their price
analysis. Page 4 GAO/NSIAD-
99-90 Contract Management B-280125 In our review, we found 22
purchases where the price analysis was based only on catalog
prices. For eight of these purchases, the price analysis consisted
of simply comparing the offered price to a current catalog or list
price less whatever discount was offered. For 14 additional
purchases, the offered price was also compared to previous prices
that were the same as the catalog or list price less whatever
discount was offered. In all 22 cases, the contracting officer
accepted the offered price. In our discussions with contracting
personnel, some believed that catalog or list prices could be
accepted as fair and reasonable because they assumed that these
are the prices paid by commercial customers. Not Using Pertinent
In several cases, contracting personnel did not use pertinent
historical Contract File Information pricing information
contained in contract files that should have raised questions
about the reasonableness of offered prices. For example, in June
1998, a DOD contracting officer paid $7,320 each for 31 generator
adapter kits, in part, based on a comparison to prior government
purchases since April 1995 at the same price and other small
quantity commercial sales in 1998 at $9,727 each. The price
analysis for this purchase referred to an August 1997 management
directive cautioning that historical prices should only be used if
they were prior to 1993 because more recent purchases from this
contractor were overpriced by about 300 percent. Nevertheless, the
1995 price was used to support a price reasonableness
determination for the 1998 price of $7,320. According to
information in the files, DOD had purchased eight of these items
in 1989 for $1,129 per unit. The price analyst told us that
because of her workload she did not have time to research the
price reasonableness of the 1989 purchase made by another DOD
buying office. In a second case, in October 1996, using a
commercial contract, an Air Force contracting officer paid $1,307
each for 81 aircraft engine vanes for the KC-135 aircraft. The
commercial price was based on the catalog price less a 7.5-percent
discount. This part is also used on the F-16 engine and was bought
by the Air Force in September 1995 under a separate noncommercial
contract for $300 each. The contracting officer was aware of lower
prices for common parts but did not believe that it was
appropriate to use another contract to purchase the vanes. In
discussing this situation with Air Force contracting personnel,
they advised us that the noncommercial contract could have been
used to purchase the vanes. In a third case, in November 1996, a
parts distributor offered a price of $453 per unit for 381 wiring
harnesses used on C-130 aircraft. The Defense Page 5
GAO/NSIAD-99-90 Contract Management B-280125 Logistics Agency
(DLA) contracting officer accepted this price based on a
comparison to commercial sales prices, with the largest purchase
being for seven units at $495 each. According to information in
the contract files, DOD purchased 461 wiring harnesses directly
from the manufacturer in 1993 for $103 each and 194 units in 1994
at $91 each. Subsequently, the manufacturer declined to sell the
item directly to the government but instead referred DLA to its
authorized distributor. The contracting officer did not use the
historical pricing information to attempt to negotiate a lower
price with the distributor for the 1996 purchase. A DLA official
told us it has initiated a review of the price paid for this
purchase. In another case, an Air Force contracting officer
determined that an offered unit price of $2,718 for 83 B-1B
hydraulic-cylinder blocks was fair and reasonable when compared to
a 1996 unit price of $2,535, a 7-percent increase over 17 months.
However, the contracting officer told us she did not consider
other information in the contract file showing that the unit price
paid for this item had increased from $441 in 1989 to $2,535 in
1996, a 475-percent increase. She said she was only required to
compare the currently offered price to the last price paid. Not
Using Solicitation We found that contracting officers,
generally, were not using a Clause for Obtaining
discretionary solicitation clause requiring offerors to provide
information Information other than certified cost
and pricing data, such as sales data, in support of their offered
prices. The FAR allows contracting officers to insert this clause
in solicitations when they determine that such data will likely be
needed to evaluate price reasonableness. For a commercial item,
this clause requires offerors to submit, at a minimum, information
on the prices at which the same or similar items have been sold in
the commercial market that is adequate for evaluating the
reasonableness of prices offered the government. For commercial
items where the price is listed in a catalog, the clause also
requires offerors to explain the basis of each offered price, its
relationship to the established catalog price, and an explanation
of how the proposed price relates to the price of recent sales in
quantities similar to those requested by the government. DLA
guidance recommends this clause in all solicitations and contracts
for sole-source commercial items. FAR clause 52.215-20 or its
predecessor FAR clause 52.215-41. Page 6
GAO/NSIAD-99-90 Contract Management B-280125 We found that some
contracting personnel were unfamiliar with this clause while
others did not have a clear understanding about when it should be
used for commercial purchases. Some contracting supervisors
believe that because this clause is also applicable to
noncommercial contracts, there may be some confusion among
contracting personnel about its applicability to commercial
contracts. Paying Prices That Included The FAR and military
service guidance emphasize that in determining price Unneeded
Services reasonableness, contracting personnel
must understand the basis for an offered price. Accepting offered
prices without considering such things as quantities to be
purchased, delivery times, market conditions, or sales to other
customers can result in prices that are not fair and reasonable.
For example, the catalog prices of commercial aircraft parts are
often based on small quantities delivered rapidly; in contrast,
government requirements may be for larger quantities to be placed
in inventory and delivered over much longer periods of time. We
identified two instances where contracting officers paid
commercial catalog-based prices to restock inventories rather than
to meet urgent requirements requiring rapid delivery. In the first
instance, the contracting officer purchased 11 wing components in
December 1996 for $38,693 each, which was the contractor's
published catalog price. The catalog prices were based on a 10-day
delivery period. However, the government's required delivery was
July 1998--19 months later--for routine restocking of spare parts.
In the second instance, in March 1997, the Air Force placed an
order for 404 engine acoustical panels at the commercial catalog-
based price of $588 each based on a 10-day delivery period.
However, because of the large quantity ordered, the contractor
indicated that delivery could not start until the end of August
1997 and would not be completed until April 1998, over a year
after the order was placed. Nevertheless, the order was placed at
a price based on 10-day delivery. In both cases, we found no
indication that contracting personnel inquired about the
possibility of lower prices for extended delivery times. In
contrast to these two situations, we found another buying activity
that negotiated a large discount for items not requiring rapid
delivery. The contracting officer negotiated a 61-percent discount
off the offeror's commercial catalog prices for about 8,000 engine
spare parts. Delivery would be based on the time required to
manufacture the items ordered rather than the short delivery times
provided for in the catalog. The government would, however, be
required to pay the premium prices paid by Page 7
GAO/NSIAD-99-90 Contract Management B-280125 commercial customers
if the shorter catalog delivery times were required to meet urgent
needs. Not Documenting the The FAR provides that a
contracting officer can compare currently offered Reasonableness
of Prior prices to prior prices, if both the validity of the
comparison and the Prices reasonableness of
the previous price(s) can be established. However, we found that
many contract files did not show how contracting officers
determined that a price previously paid for an item was fair and
reasonable and, therefore, could be relied on in evaluating the
currently offered price. This issue has been previously recognized
as a potential problem. For example, an Air Force Institute of
Technology and Federal Acquisition Institute Contract Pricing
Resource Guide, referenced in the FAR, cautions that, "It is not
uncommon to review an item purchase history and find that no basis
other than the last price paid has been used for years to
determine price reasonableness." Reasons Given for Limited
Contracting personnel offered a number of reasons why they did not
Price Analysis perform more extensive price
analysis. Some said that given their workload, the most they could
do was to compare the offered price to the catalog price or to the
last price paid by the government. They said they did not have
enough time to obtain commercial sales information or develop
detailed independent cost or parametric estimates. At two
activities, managers acknowledged that workforce downsizing had
increased the workload of contracting personnel. At one activity,
they said management's priority had been to clear a large backlog
of purchase orders, which made price a secondary consideration. In
some cases, contracting personnel said pressures from their
customers to meet urgent requirements prevented more extensive
price analysis and negotiations over price. In these instances,
customers told contracting personnel that they were less concerned
about price than meeting mission requirements or keeping to
overhaul and repair schedules. In a few cases, contracting
personnel said that additional price analysis was not needed
because the offered prices compared favorably to prices previously
paid. DOD officials noted that one difficulty facing contracting
officers is that some contractors take advantage of their position
as sole-source commercial item providers. Further, one official
stated that some contractors refuse to negotiate what the
government would consider fair and reasonable prices. DOD
officials noted that in these situations Page 8
GAO/NSIAD-99-90 Contract Management B-280125 contracting officers
do not have enough leverage. For example, negotiations by DLA with
one sole-source supplier resulted in a price that DLA did not
believe was fair and reasonable because it was almost double the
cost of the item. In this instance, the negotiated price was about
three times the price previously paid. Nevertheless, DLA decided
to purchase the item at a price it considered excessive, but
limited the quantity to the amount needed until an alternative
source could be developed from among manufacturers who make
similar items. Efforts to Improve DOD continues to add to the
training and guidance it offers contracting Price Analysis
personnel to assist them in performing price analysis in a
commercial contracting environment. Between June and August 1997,
each of the military services and DLA issued additional guidance
on the pricing of commercial items. The guidance recognizes the
challenges that contracting officers face in determining whether
prices for commercial items are fair and reasonable, especially
when there is no competition. The guidance also stresses the
importance of negotiating prices when buying commercial items, and
reemphasized FAR guidance regarding the pricing of commercial
items and the contracting officer's responsibility to ensure that
prices paid by the government are fair and reasonable. The
guidance cautioned contracting officers about the need to fully
understand the basis of commercial catalog prices and not to
assume that they are fair and reasonable just because they are in
a published commercial catalog. Further, the guidance reminded
contracting personnel that for commercial acquisitions, the FAR
allows them to request information other than certified cost and
pricing data to the extent necessary to determine price
reasonableness. In fiscal year 1998, the Office of the Deputy
Under Secretary of Defense (Acquisition Reform) sponsored a series
of satellite broadcasts to provide training on acquisition reform,
including the pricing of commercial items. Specific subjects
covered included commercial pricing practices; performing market
research; and the use of historical, comparative, and parametric
pricing techniques. A June 1998 session was devoted entirely to
the pricing of commercial spare parts in a sole-source
environment. In addition, during calendar year 1998, both DLA and
the Air Force provided contracting personnel with 1-day training
courses on commercial acquisition and pricing. The topics covered
by this training were similar to DOD's satellite broadcasts. Page
9 GAO/NSIAD-99-90 Contract
Management B-280125 Also, in February 1998, the Deputy Under
Secretary of Defense (Acquisition Reform) issued a Commercial
Pricing Information Guide. The guide emphasizes the link between
good market research and the ability of contracting officers to
negotiate fair and reasonable prices for commercial items. In June
1998, the Air Force Materiel Command issued its own supplementary
Commercial Acquisition Guide. In addition to discussing price
analysis techniques that can be used for commercial purchases, the
guide emphasizes the importance of sound market research in
determining price reasonableness and the need for contracting
personnel to adequately document the results of their research in
the contract files. Further, DOD, DLA, and military services have
established Internet Web sites with additional guidance and tools
to assist contracting personnel in performing market research and
in acquiring and pricing commercial items. Other opportunities to
obtain training on pricing commercial items included presentations
by DOD and DLA officials during DOD's 1998 Acquisition Reform Week
Activities, and classes sponsored by DOD's Defense Acquisition
University. DOD is continuing its efforts to develop additional
training on commercial pricing, including computer-based training.
Recent Legislation The Fiscal Year 1999 Strom Thurmond National
Defense Authorization Act required clarification of the procedures
and methods used by government contracting personnel to determine
the reasonableness of commercial prices. This act requires FAR
revisions to provide specific guidance on (1) the application and
precedence of specified price analysis tools; (2) the
circumstances under which contracting officers should require
contractors to provide prior sales prices for the same or similar
items, or other information, other than certified cost and pricing
data, in support of their commercially offered prices; and (3) the
roles and responsibilities of DOD support organizations, such as
the DCAA, in procedures for determining price reasonableness. The
act also requires DOD to track price trends for commercial items,
and to take appropriate action to address any unreasonable
escalation in prices identified by the price trend analysis. The
same act also directed that the FAR be revised to require
offerors, as a condition for entering into a contract, to provide
sales and other information, other than certified cost and pricing
data, in support of their offered prices when such information is
requested by the contracting officer. This requirement would be
subject to any exceptions that the Page 10
GAO/NSIAD-99-90 Contract Management B-280125 Federal Acquisition
Regulatory Council determines appropriate. As of May 1999,
regulations to implement the act had not been published.
Conclusions The current contracting environment for sole-
source commercial items presents negotiating challenges for DOD
contracting personnel. Based on our work, DOD's efforts to improve
the quality of price analysis have yet to be fully understood or
embraced by all DOD contracting personnel. However, it is
important to recognize that DOD is in the midst of training its
contracting personnel on commercial pricing. In time, effective
training should improve their price analysis and negotiating
skills. Recent legislation requiring increased guidance for
contracting personnel on price analysis tools, the appropriate use
of information other than cost or pricing data, and the role of
support agencies should also help government contracting personnel
become smarter buyers in the commercial marketplace. Beyond these
actions, we believe that two areas deserve additional attention.
One is the lack of awareness or understanding by contracting
personnel concerning the use of a solicitation clause that
requires contractors to provide information other than certified
cost and pricing data in support of their offered prices. The
second is the failure of contracting personnel to use pertinent
historical pricing information contained in contract files that
should have raised questions about the reasonableness of offered
prices. Recent commercial prices paid by some DOD contracting
officers may reflect insufficient training or a lack of
understanding of what constitutes good price analysis in a sole-
source environment. Recommendations We recommend that the
Secretary of Defense direct the Under Secretary of Defense for
Acquisition and Technology to * include, as part of DOD's efforts
to implement recent legislation, clarification of the
circumstances when it is appropriate to use the FAR clause
(52.215-20) requiring an offeror to provide information on the
prices at which the same or similar items have been sold in the
commercial market and * issue a memorandum to contracting
personnel emphasizing the importance of understanding and using
historical pricing information for sole-source commercial item
purchases. Page 11 GAO/NSIAD-
99-90 Contract Management B-280125 Agency Comments In
commenting on a draft of this report, DOD concurred with our
recommendations. DOD said it would issue the guidance recommended
by the draft report as part of its implementation of the
requirements of the Strom Thurmond National Defense Authorization
Act for Fiscal Year 1999. Scope and To determine and
evaluate the price analysis DOD contracting personnel Methodology
were performing to arrive at fair and reasonable prices for
commercial sole-source items, we focused on the purchase of
aircraft parts. We did this because aircraft parts and related end
items represented the largest category of commercial sole-source
purchases DOD made during fiscal year 1997. Within aircraft spare
parts, we selected those DOD buying activities that were major
purchasers of commercial sole-source items. We obtained this
information by analyzing DOD's DD350 database, which contains all
contract transactions over $25,000. Based on our analysis, we
selected the following DOD buying activities for review: * Air
Force's Air Logistics Center, San Antonio, Texas; * Air Force's
Air Logistics Center, Oklahoma City, Oklahoma; * U.S. Special
Operations Command, Fort Eustis, Virginia; * Defense Supply
Center, Columbus, Ohio; * Defense Industrial Supply Center,
Philadelphia, Pennsylvania; and * Defense Supply Center, Richmond,
Virginia. In addition, we selected the Naval Inventory Control
Point, Philadelphia, Pennsylvania, because it was located at the
same address as the Defense Industrial Supply Center in
Philadelphia. For each of these buying activities, we obtained
additional information from the activity on commercial sole-source
purchases. From this information, we further narrowed the universe
down to those sole-source commercial purchases over $100,000 where
the price was negotiated during fiscal years 1997-98. Finally, we
judgmentally selected a total of 65 contract actions amounting to
about $79 million for review. For each contract action, we
reviewed the information in the contract file, including the price
analysis and negotiation memorandums, and identified the price
analysis tools contracting personnel used to determine fair and
reasonable prices. We also discussed this information with
selected contracting personnel who conducted the price analyses.
Based on these reviews and discussions, we evaluated how well
contract personnel performed their price analyses. Page 12
GAO/NSIAD-99-90 Contract Management B-280125 To identify the
guidance and training available to contracting personnel to assist
them in determining a fair and reasonable price, we asked DOD,
DLA, and military service representatives to provide us with
available guidance and training on commercial purchases. We
reviewed this information and discussed it with selected
contracting personnel and management at DOD buying offices. Our
work was performed in accordance with generally accepted auditing
standards. We are sending copies of this report to the Honorable
William Cohen, Secretary of Defense; the Honorable Jacob J. Lew,
Director, Office of Management and Budget; and Lieutenant General
Henry T. Glisson, Director, Defense Logistics Agency. Copies will
also be made available to others on request. Please contact me at
(202) 512-4587 if you or your staff have any questions concerning
this report. Major contributors to this report are listed in
appendix II. David E. Cooper Associate Director Defense
Acquisitions Issues Page 13
GAO/NSIAD-99-90 Contract Management Contents Letter
1 Appendix I
16 Comments From the Department of Defense Appendix II
20 Major Contributors to This Report Abbreviations DCAA
Defense Contract Audit Agency DLA Defense Logistics Agency
DOD Department of Defense FAR Federal Acquisition
Regulation Page 14 GAO/NSIAD-
99-90 Contract Management Page 15 GAO/NSIAD-99-90 Contract
Management Appendix I Comments From the Department of Defense
Appendix I Page 16 GAO/NSIAD-90-99 Contract Management
Appendix I Comments From the Department of Defense Page 17
GAO/NSIAD-90-99 Contract Management Appendix I Comments From the
Department of Defense Page 18
GAO/NSIAD-90-99 Contract Management Appendix I Comments From the
Department of Defense Page 19
GAO/NSIAD-90-99 Contract Management Appendix II Major Contributors
to This Report
Appendix II National Security and Paula J. Haurilesko
International Affairs Thomas W. Hopp Julia M. Kennon Division,
Washington, Leslie E. Schafer D.C. Charles
W. Thompson Boston Field Office Paul M. Greeley Los Angeles
Field Carlos M. Garcia Office Noel J.
Lance % %! Letter Page 20 GAO/NSIAD-99-
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