Better planning would help reduce the EPA’s reliance on high-risk contracts, an IG audit has said, finding that low-risk, firm-fixed-price contracts represented only 40 percent of the agency’s contract awards and only nine percent of the dollar value of contract obligations in the second quarter of fiscal 2017.
Cost-reimbursable contracts–such as cost-plus-fixed-fee and time-and-materials contracts–put the burden of cost risk on the government and have been the subject of OMB guidance and a 2013 IG report critical of their use in EPA’s Superfund program.
The new report found that the agency cited planning difficulties in each of the 10 sole source “bridge” contracts examined in detail; such contracts are awarded to extend existing contracts without full and open competition. However, it found that these types of contracts were awarded even when “there was adequate time to plan and conduct a competitive award process. In addition, two of the sampled contracts did not document acquisition planning as required by EPA policy and federal regulations.”
Although contracting officers are required to explain the need for high-risk contract vehicles, “we found that the provided explanations regarding why cost-reimbursement contracts were needed or how the government’s risk would be managed were not convincing. Instead, the explanations included only general language about uncertainties and the need for services.”
The report said that management’s responses met the intent of the recommendations to address those issues.