U.S. Department of Labor Office of Inspector General

Audit Report

OIG RECOMMENDS IMPROVEMENTS TO CONTRACTING PROCEDURES AND PRACTICES FOR
FIXED-PRICE CONTRACTS
 

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Report Title:   OIG Recommends Improvements to Contracting Procedures and Practices for
Fixed-Price Contracts

Report Number:  18-98-002-07-001

Issue Date:  January 9, 1998
 
While performing an audit of the costs claimed by a Section 8(a) minority contractor, the OIG noted a weakness in the Government's practices and procedures when awarding noncompetitive fixed-price contracts. More specifically, the Contracting Officers were not reviewing the contractor's actual cost data at the end of each contract year to determine whether the price for the option year(s) should be renegotiated to ensure it was equitable and reasonable.

DOL needs to establish policies and procedures that will protect the Government's interest when its Contracting Officers enter into fixed-price contracts where price competition is not required. As a minimum, the policies should require (1) all contractors to submit actual costs at the end of each year and (2) option year costs be negotiated based on actual cost data from the prior period.

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