Evaluation of Subcontract Price Proposals
Abstract
This is the final report on the Audit of the Evaluation of Subcontract Price Proposals. Comments on a draft of this report were considered in preparing the final report. We made the audit from October 1987 through May 198% The initial objectives of the audit were to evaluate procedures used by procurement officials to identify when Government assist audits of subcontractor price proposals were required and to determine the extent that Government assist audit reports were used by procurement contracting officers in negotiating contract prices. During the audit, we expanded our objectives to include the prime contractor's evaluations of subcontractor cost and pricing data. We statistically sampled and reviewed 30 fixed-price contract pricing actions for FY 1987 with a negotiated value of $5.8 billion from a universe of 225 DOD pricing actions valued at $11.7 billion. The audit showed that DOD procurement officials did not require prime contractors to comply with Defense and Federal Acquisition Regulations' requirements regarding subcontract price proposals. We assessed internal controls that focused on determining compliance with Defense and Federal Acquisition Regulations' requirements. Based on our statistical sample, the audit projected that DOD contracts were overpriced by $94 million because procurement officials did not require prime contractors to submit the results of their subcontract cost analyses before negotiating a fixed contract price and did not protect DOD'S interest when subcontract negotiations were not completed until after the Government and prime contractor negotiations were concluded. Also, nine contracts were potentially overpriced by an additional $1,471,202 because contractors did not furnish Government negotiators with accurate, complete, and current cost or pricing data as required by the Truth in Negotiations Act.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 09, 1990
- Accession Number
- ADA385995
Entities
Organizations
- Office of the Inspector General, U.S. Department of Defense