Navy and Marine Corps Have Weak Procurement Processes for Cost-reimbursement Contract Issuance and Management
OFFICE OF THE INSPECTOR GENERAL (DEPARTMENT OF DEFENSE) ALEXANDRIA VA
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We are required to perform this audit in accordance with the FY 2009 National Defense Authorization Act, section 864, Regulations on the Use of Cost Reimbursement Contracts. Our objective was to determine whether the Navy and Marine Corps complied with interim Federal Acquisition Regulation FAR revisions on the use of cost-reimbursement contracts. This is the fourth in a series of reports on DoD compliance with the interim rule for the use of cost-reimbursement contracts. We reviewed a nonstatistical sample of 170 contracts 77 basic contracts and 93 orders out of 9,973 Navy and Marine Corps contract actions, valued at over 32 billion from March 17, 2011, through February 29, 2012. Of the 170 contracts reviewed, valued at about 7.7 billion, Navy and Marine Corps contracting personnel did not consistently implement the FAR revisions, called the interim rule, for 134 contracts, valued at about 7.54 billion. Contracting personnel issued contracts that did not follow the interim rule because they were not clear about interim rule requirements or were unaware of the interim rule. As a result, contracting personnel continue to issue cost-reimbursement contracts that may increase DoDs contracting risks because cost-reimbursement contracts provide less incentive for contractors to control costs. We also completed a subsequent review of 29 contracts at Naval Sea Systems Command Headquarters and Quantico Marine Corps Base approximately 1 year after our initial site visit and determined that minor improvements occurred with the contract issuance processes.
- Administration and Management