Report | March 29, 2016

U.S. Army Engineering and Support Center, Huntsville, Price Reasonableness Determinations for Federal Supply Schedule Orders for Supplies Need Improvement

DODIG-2016-069

Objective

We determined whether U.S. Army Corps of Engineers contracting officers made determinations of fair and reasonable pricing for General Services Administration Federal supply schedule orders awarded for purchases of supplies. We reviewed a nonstatistical sample of 33 orders, valued at $13.6 million.

Findings

Contracting personnel at the U.S. Army Engineering and Support Center, Huntsville (CEHNC), made adequate price reasonableness determinations for 8 of 33 orders, valued at $3.6 million of $13.6 million, reviewed. Specifically, CEHNC contracting personnel compared the prices from more than one technically acceptable vendor quote and selected the lower vendor quote.

However, CEHNC contracting personnel did not adequately document and support their price reasonableness determinations for 25 orders, valued at $10 million. Specifically, CEHNC contracting personnel relied on:

  • inadequate independent Government estimates for all 25 orders. This occurred because they relied on the expertise of the preparers of the independent Government estimates rather than having the preparers document and support the basis of the estimate as required by the Army Federal Acquisition Regulation Supplement and U.S. Army Corps of Engineers guidance. In addition, while the contracting officers stated that they took training on preparing independent Government estimates, they did not document that they completed that training;
  • vendor quotes that were eliminated from consideration for technical reasons for 7, valued at $3 million, of the 25 orders without verifying whether the prices were still valid for comparison purposes. The contracting officer stated that this was an oversight. In addition, we determined that CEHNC did not have guidance on using technically unacceptable quotes for price reasonableness determinations.

In addition, CEHNC contracting personnel relied on price reasonableness determinations that were not approved until after the award of 4, valued at $1.76 million, of the 33 orders. The contracting officer stated that this was an oversight. In addition, we determined that CEHNC did not have guidance requiring contracting personnel to approve price reasonableness determinations before awarding orders. As a result, CEHNC customers may have paid more than they should have for the supplies purchased.

Recommendations

We recommend the Commander, CEHNC, provide refresher training detailing contracting officers responsibilities for developing, reviewing, and approving independent Government estimates; document contracting personnel completion of the training; develop and implement guidance requiring contracting personnel to verify that the prices from quotes eliminated for technical reasons are valid for comparison purposes when making price reasonableness determinations; and develop and implement guidance requiring contracting personnel to approve price reasonableness determinations before awarding orders.

Management Comments and Our Response

The Commander, CEHNC, addressed all specifics of the recommendations, and no further comments are required.

This report is a result of Project No. D2015-D000CF-0207.000.