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HRD-82-93 1 (1982-07-02)

handle is hein.gao/gaobabdlr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 HUMAN RESOURCES DIISION July 2, 1982 The Honorable Albert Angrisani H 111 Assistant Secretary for Employment and Training 118878 Employment and Training Administration Department of Labor Dear Mr. Angrisani: Subject: Job Corps Should Stop Using Prohibited Contracting Practices and Recover Improper Fee Payments (GAO/HRD-82-93) During our current survey of Job Corps contract administra- tion, we found that Job Corps Regional Offices seem to be admin- istering contracts for center operations as cost-plus-percentage- of-cost rather than cost-plus-fixed-fee. Federal law prohibits the cost-plus-percentage-of-cost system of contracting. This practice was previously brought to the Job Corps Director's attention by a national office review team in May 1981, but action was not taken to stop the practice or correct errors. The cost-plus-percentage-of-cost system of contracting is prohibited by 41 U.S.C. 254(b). Also, Federal Procurement Regulations state: The fixed fee once negotiated does not vary with actual cost, but may be adjusted as a result of any changes in the work or services to be performed under the contract (FPR 1-3.405-5). Job Corps currently has 72 two-year contracts with an estimated annual cost of approximately $334 million for operating 74 centers. Eleven of these contracts are with non- profit agencies that do not receive a fixed fee. Of the remaining 61 contracts, we identified at least 39 that seem to have been treated as cost-plus-percentage-of-cost contracts or had the fee increased without changes in the scope of work. We estimate that over $600,000 in fees were added to these contracts with no apparent changes in the scope of work. We found examples of fee changes with no apparent changes in the scope of work in all 10 Job Corps regions. For example, in the Dallas Region, the contract for operating the Guthrie Job Corps Center was modified twice with the justification to in- crease the cost per corps member year. The increases were for $364,000 and the fee was increased $14,000, or 3.9 percent of the cost. The fixed fee on the original contract was also 3.9 percent (204801)

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