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Counter Narcoterrorism Technology Program Office Task Orders Had Excess Fees, and the Army Was Incorrectly Billed

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We reviewed task orders under the Counter Narcoterrorism Technology Program Office CNTPO indefinite-delivery, indefinite-quantity IDIQ contract to determine whether the Space and Missile Defense Command SMDC Contracting and Acquisition Management Office CAMO applied the correct fixed fee to material and other direct cost ODC contract line items. Our review showed that the task orders contained excess fees on material and ODC contract line items and billing errors on ODC contract line items. SMDC CAMO contracting officers awarded 25 task orders to 2 contractors that contained fees in excess of the rates that were incorporated in the contractors IDIQ contracts. This occurred because SMDC CAMO management did not verify that contract provisions incorporated into the IDIQ contracts for fees were clear and specific. In addition, SMDC CAMO contracting officers used boilerplate language and did not verify the rates used in the IDIQ contracts or task orders. SMDC CAMO overpaid Raytheon approximately 815,000 and the U.S. Training Center USTC approximately 77,000 in fixed fees and will overpay approximately 446,000 to Raytheon and approximately 20,000 to USTC in additional fixed fees if the IDIQ contracts and related open task orders are not modified to reflect the correct rates. Northrop Grumman charged the Army for non-CNTPO work because the contractor was allowed to directly bill for payment without a detailed invoice review. Also, Northrop Grumman double billed the Army for insurance charges because the contracting officers representative did not conduct in-depth reviews of invoices. Resolving these problems could save 1,526,279. The Deputy Assistant Secretary of the Army for Procurement should conduct a review of contracting officers at the SMDC CAMO. SMDC CAMO should meet with Raytheon and USTC to reach agreement on the return of excess fees paid, ensure that Northrop Grumman refunds the Army, and coordinate a more detailed invoice approval process.

Subject Categories:

  • Administration and Management
  • Economics and Cost Analysis
  • Military Forces and Organizations
  • Logistics, Military Facilities and Supplies

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