Contracting Officer Determinations of Price Reasonableness When Cost or Pricing Data Were Not Obtained

The audit was initiated as a result of issues identified in other recent Inspector General, DoD, audits related to price reasonableness. Specifically, we were concerned about how contracting officials were adjusting to Federal Acquisition Regulation changes dealing with the definition of commercial items and how items were being evaluated for price reasonableness. We selected our sample from a FY 1998 and FY 1999 DD-350 database of contracts that were more than $100,000 in value and were either sole-source actions or competitive one-bid actions for which certified cost or pricing data were not obtained. The numerous miscodings in the DD-350 contracts database precluded any use of statistical sampling. The apparent lack of competition and certified cost or pricing data make these contract actions more difficult than many for price analyses and price reasonableness determinations. Our audit examined 145 contracting actions, valued at $652 million, on contracts worth $3.1 billion. The actions were awarded in FY 1998 and FY 1999 and included 103 sole-source actions and 42 competitive one-bid actions. Of the 145 contracting actions, 93 were noncommercial and 52 were commercial. The contracts were reviewed at 18 contracting activities (5 each at the Army, Navy, and Air Force, and at 3 Defense agencies).