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DCCUMENT FESUME
04405 - [B3494756]
fAdequacy of Regulations Governing the Negotiation of
Noncompetitive Contracts over $100,000 Based on Catalog or
Market Prices]. PSAD-73-51; B-39995. December 12, 1977. 3 pp. +
enclosur- (11 pp.).
Report to Joel W. Solomon, Administrator, General Services
Administration; by Richard W. Gutmann, Director, Procurement ani
Systems Acquisitions Div.
Issue Area: Federal Procurement of Goods and Services:
Reasonableness of Prices Under Negotiated Contracts and
Subcontracts (1904).
Contact: Procurement and Systems Acquisition Div.
Budget Function: Miscellaneous: Financial Management and
Information Systems (1002).
Organizaticn Concerned: Department of the Interior; Department
of Commerte; Department of Health, Education, and Welfare;
Department ot Transportation; Veterans Administration.
Federal Procurement Regulations state that contracting
officers shall, with some exceptiors, obtain contractors' cost
or pricing data in support of proposed prices for noncompetitive
contracts. A review of the pricing of 204 nonccmpetitive
fixed-price contracts and modifications with Federal agencies
,,,owed that there was no assurance that the pices negotiated
for 201 of the contracts were reasonable. Findings/Conclusions:
Where cost or pricing data is required, a cost analysis or
review and evaluation of the contractorls data and judgmental
factors applied in estimating the cost of performing the
contract are to be performed. One exception to the requirement
is where the contracting officer deterwines that the proposed
price for an item is based on an established catalog or market
price for a commercial item sold by the contractor in
substantial quantities to the general public. Because of the
lack of specific criteria in the Federal Procurement
Regulations, contractors were granted exemptions from furnishing
cost or pricing date for 201 of 204 contracts without adequate
assurance that the exemptions were justified. In many cases
procurement personnel granted th. ex.vptions *ithout obtaining
contractors' price lists or other pricing documents, and, in
most cases, sales data were not obtained. An analysis of sales
data from contractors for selected items procured under 70 of
the contracts indicated that the granting of an exemption for
many items was not warranted. Recommendations: The
Administrator of General Services should approve a proposed
change in the Federal Procurement Fegulations providinq specific
guidelin-s for determining the types of supporting data which
should be obtained and analyzed in order to determine whether
exemptions from furnishing cost or pricing data are warranted.
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