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Summary

On May 28, 2008, we issued an interim report regarding FAA’s National Airway Systems Contract as part of our ongoing audit of the Use of Cost–Plus–Award–Fee (CPAF) contracts within the Department. We found that contracting officials did not justify the cost–effectiveness of selecting a CPAF–type contract by evaluating administrative costs versus expected benefits to the government. Without this evaluation, the Aeronautical Center had no assurance that a CPAF–type contract was appropriate. Additionally, the performance evaluation plan did not include measurable criteria needed to adequately evaluate contractor performance. Further, a portion of the award–fee criteria required the contractor to merely comply with basic contractual requirements. The performance evaluation plan allowed award–fee payments up to 72.5 percent of the award–fee pool for average or below results. The problems cited in this report existed, in part, because Aeronautical Center personnel did not have detailed guidance on how to structure award–fee plans to incentivize contractors. FAA officials agreed to select another contract type more suitable for obtaining engineering and technical support, and revise Aeronautical Center guidance.