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Audit Reports

Date

Improvements in Cost-Plus Award-Fee Processes are Needed To Ensure Millions Paid in Fees are Justified

Project ID
ZA2010092
File Attachment

On August 25, we issued our report on the Department of Transportation's (DOT) use of cost-plus-award-fee (CPAF) contracts to the Office of the Secretary (OST) and the Federal Aviation Administration (FAA), with separate recommendations to each.  Concerns about CPAF contracts throughout the Government prompted us to examine how DOT manages CPAF contracts.  In our review we: (1) assessed award-fee ratings and payments made by Operating Administrations based on documentation used to support them, (2) evaluated Operating Administrations' award-fee guidance, payment structure, and evaluation criteria, and (3) identified challenges in DOT's management of CPAF contracts.

Our report identifies problems Operating Administrations have experienced in designing, administering, and justifying CPAF contracts.  Overall, we found that: (1) performance evaluation plans did not include measurable criteria to adequately evaluate contractor performance; (2) descriptions defining adjectival ratings were vague and/or inconsistent and did not clearly define the basis for rating performance; (3) performance monitors did provide adequate support to justify contractor ratings; (4) payment structures allow for award-fee payments for average or below-average performance; and (5) contracting officials did not justify the cost effectiveness of selecting a CPAF contract.  In a consolidated response from OST, FAA concurred with our recommendations targeted for FAA.  OST concurred with two of our recommendations for OST and partially concurred with the other two.