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B-197325 1 (1980-03-25)

handle is hein.gao/gaobabjfa0001 and id is 1 raw text is: I ,l 1 '-I ~2VJt / 'V.. GAO United States General Ac,cunting Office Washington, DC 20548 l3Zs (/2L Jik. Office of General Counsel In Rep!y Refer to: B-197325 0 ) 4 u I I I:t Muv James D9 Cqrrle Acting Administrator Office of Federal Procurement Policy Office of Managewent and F3udget Executive Office of the President March 25, 1980 .16 Dear Mr. Currie: By letter lated December 28, 1979, your office requested our views on a draft segment of the Federal Acquisition Regulation (FAR) concerning the establishment of profit objectives for use in negotiating noncompotitive contracts. As vie understand it, the draft is an outqrowth of the Commission on Government Procurement recommendation that the Offica-of Federal Procurement Policy (OFPP) take the lead ,. development of uniform government-wide guidelines for determining profit objectives in negotiated contracts. For the following reasons we are opposed to the draft segment as proposed. Initially, we note that the proposed regulation does not establish uniform government-wide guidelines for determining profit objectives, but rather requires each agency to develop a structured approach for determining prenegotiation profit objectives. We think this approach is undesirable because even under ideal circumstances each agency's structure might be significantly different and hence no uniform profit policy is li)cely to result. In any event, we believe the criteria contained in the pro- posed regulation and which are to be considered by an agency in establishing its structured approach are not sufficiently definite and that insufficient emphasis has been placed on contractor capital investment in facilities. Section 15.806-l(b) states that: In the long term, earned profit from Government contracts must be com- parable with return from other invnstment opportunities involving similar risks. However, there is no guidance r S.- * I -'Pt 00 . . , ,

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