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U.S. Army Contracting Command-Redstone Arsenal and U.S. Army Medical Research Acquisition Activity ProperlyAwarded and AdministeredFirm-fixed-price Level-of-effort Term Contract Actions

DODIG-2016-132

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Aug. 30, 2016 — Objective

We determined whether Army Contracting Command-Redstone Arsenal (ACC-RA) and U.S. Army Medical Research Acquisition Activity (USAMRAA), officials properly awarded and administered firm-fixed-price level-of-effort term contracts in accordance with Federal and DoD regulations and policies. A firm-fixed-price level-of-effort term contract requires the contractor to provide a specified level-of-effort over a stated period of time on work that can be stated only in general terms and the Government is required to pay the contractor a fixed-dollar amount. Firm-fixed-price level-of-effort term contracts are suitable for investigations or studies in a specific research and development area.

During FY 2014 and FY 2015, ACC-RA and USAMRAA awarded 73 FFP LOE term contract actions totaling $332 million. Of the 73 contract actions from ACC-RA and USAMRAA, we non-statistically selected 15 contract actions for review (nine base contracts and six task orders). The 15 contract actions were for various research and development efforts for medical, software development, and engineering services.

Finding

ACC-RA and USAMRAA contracting officials properly awarded firm-fixed-price level-of-effort term contracts and task orders in accordance with Federal and DoD guidelines.

Specifically, for the nine contracts and six task orders reviewed, ACC-RA and USAMRAA contracting officials properly justified the use of the firm-fixed-price level-of-effort term contract type. In addition, ACC-RA and USAMRAA contracting officials properly administered the reviewed firm-fixed-price level-of-effort contracts and task orders by designating qualified contracting officer’s representatives to monitor contractor performance and providing adequate contract surveillance. As a result, DoD Components benefited by using firm-fixed-price level-of-effort term contracts that allowed contractors the flexibility to develop innovative research and new technologies in support of the warfighter. Therefore, we are not making any recommendations.

Management Comments and Our Response

We provided a discussion draft to ACC-RA, and U.S. AMRAA officials on July 12, 2016; however, they did not provide comments.