Summary

GAO reviewed the techniques used by the Department of Defense procurement personnel to determine the reasonableness of noncompetitive fixed-price contract proposals within the $10,000 to $100,000 range, focusing on whether the government's evaluation of contractors' price proposals was adequate to assure the negotiation of fair and reasonable prices.

GAO noted that: (1) in many of the contracts that GAO examined, the information in the contract file did not support the contracting officer's determination that the price was reasonable; (2) in determining the reasonableness of prices, the contracting officers generally relied on: (a) recommendations by technical personnel, such as engineers from the requisitioning office; (b) comparisons of the price offered to previous prices paid; or (c) other price analysis techniques; (3) the Armed Services Procurement Regulation states that these techniques can be used to determine the reasonableness of price if less than $100,000 is involved; (4) however, these techniques were not always properly accomplished; (5) in many cases recommendations received from technical personnel were not supported and the reasonableness of previous prices, which were used for comparison, had not been established; and (6) in addition, other price analysis techniques used were not adequate to support a reasonableness determination.