U.S. Army Contracting Command Did Not Obtain Fair and Reasonable Prices for Communications Equipment (Project No. D2013-D000AT-0083.000)

U.S. Army Contracting Command Did Not Obtain Fair and Reasonable Prices for Communications Equipment (Project No. D2013-D000AT-0083.000)
Source: U.S. Department of Defense, Office of Inspector General

Objective
We determined whether the U.S. Army Contracting Command (ACC) obtained fair and reasonable prices for communications equipment procured from Datron World Communications, Inc. (Datron). Specifically, we reviewed 37 contract actions, valued at approximately $328 million for 127 items, on contract W15P7T-09-D-D212 and identified 75 items with associated commercial sales, valued at approximately $219 million.

Finding
Contracting officers did not obtain fair and reasonable prices for communications equipment procured from Datron to support the Afghan National Security Forces. Specifically, contracting officers did not conduct sufficient pre- or post-award price analysis. Additionally, contracting officers did not obtain the most favored customer price on 40 of 75 commercial sales items. This occurred because the contracting officers did not:

  • verify that proposed prices were fair and reasonable in accordance with the Defense Federal Acquisition Regulation Supplement before awarding the contract;
  • adequately review price changes as authorized by the contract; or
  • enforce the most favored customer clause and obtain sales data in accordance with contract requirements.

As a result, ACC potentially overpaid up to $3.3 million for communications equipment purchased for the Afghan National Security Forces.

Recommendations
The Director of Contracting, ACC–Aberdeen Proving Ground should:

  • establish quality control procedures to verify that contracting officers perform analysis to verify prices are fair and reasonable and obtain nongovernment sales information annually from the contractor to validate ACC received the lowest price,
  • obtain reseller agreements to verify they were valid and initiate action to recover any overpayment, and
  • review the actions of the contracting officers and, as appropriate, initiate corrective measures and actions to hold personnel accountable.

Management Comments and Our Response
Comments from the Director of Contracting, ACC-Aberdeen Proving Ground, addressed Recommendations 1, 2, 3, and 5 but did not address the specifics of Recommendation 4. Due to actions taken since draft report issuance, we revised Recommendation 4. Therefore, we request additional comments be provided on the revised recommendation.

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