DoD built pricing guidelines for its contracting officers before GAO had to tell them to

Bill Woods — Director of Acquisition and Sourcing Management Issues, GAO

The Government Accountability Office found in a new  report that 33 percent of defense agencies need to request additional information from contractors before they can make informed decisions about negotiating for noncompetitive contracts.

But, it turns out that GAO didn’t make recommendations to fix this problem. That’s because the Department of Defense was already working on guidelines to help its contracting officers decide whether potential noncompetitive contracts are worth their advertised prices.

In an interview on In Depth with Francis Rose, Bill Woods, the director of acquisition and sourcing management issues at GAO and author of the report, said contracting officers face unique challenges when it comes to these contracts if they don’t have the resources to judge their worth.

Head shot of Bill Woods
Bill Woods, director, acquisition and sourcing management issues, Government Accountability Office

“Normally, when you have competition, you have two or three bidders who are providing their prices and it’s quite easy to make that comparison, but you don’t have that luxury in a noncompetitive environment,” Woods said. “It may be even more difficult when you’re buying a commercial item, because normally the department would rely on prices in the commercial sector, but that can be very difficult if they don’t have access to the pricing information that they need.”

Woods said that agencies having access to historical pricing information or market experts to guide them is “a very good thing” that puts them “in a very strong position” because they can make adjustments for quantity, inflation and other factors.

Without those assets though, it becomes an uphill battle for contracting officers. DoD’s new guidelines address different ways agencies can tackle situations where they don’t have information available to them.

Agencies should research and ask questions when they can

If contracting officers are unsure if they have enough information, Woods said going to the source could be the best option.

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“Contracting officers need to bear in mind that they’re trying to reach fair and reasonable prices,” he said. “Sometimes it’s relying on historical pricing, sometimes they may need additional information from the contractors themselves about what they have sold, particular items in the market, and sometimes they need cost information.”

“The policy memo in February and the proposed revisions to the defense regulation provide an overview of the tools that are available to contracting officers to make that determination,” Woods said.

 

Agencies should ask for help from experts

Another aspect of DoD’s game plan is developing train programs and assembling a list of  cost and pricing experts to assist contracting officers.

“The Department of Defense realizes that they need to take additional steps to provide even more training,”  he said. “Sometimes the contracting officers need help from people that really understand the product that they’re buying.”

Since the guidance, regulation and training plans haven’t been implemented yet, it’s still too early to determine their overall effectiveness.

Initial results are showing where contracting officers face challenges such as obtaining up-to-date pricing information, knowing whether a contract is commercial, and push back from the contractors themselves for information when it was requested.

Despite the concerns, Woods considers the fact that DoD took initiative to address contract concerns without GAO’s help is a step in the right direction.

“Providing that guidance that the Congress was looking for lead us to conclude that we really didn’t need recommendations at the is point,” Woods said. “We needed to step back, let the department implement the steps is was taking, and then perhaps in the future, we can go back and take a look at the outcomes based on that guidance.”

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