The extent of federal spending through cost-reimbursement contracts, with which contractor costs are covered regardless of whether work gets completed, is unclear and key risk controls are not always used, GAO has said.
It said agencies obligate billions every year with these contracts, and that from fiscal 2003 to 2008, cost-reimbursement obligations were reported to have increased from $16 billion to $136 billion. While that actually represents a decrease in the percentage of those kind of contracts – because federal contracting expenditures over that period increased dramatically overall – GAO said a significant increase has been reported for obligations using the "combination" contract type.
Combination contracts include many contracts with cost-reimbursement obligations that are not recorded as such, according to GAO-09-921.
According to the Office of Federal Procurement Policy, a decision was recently made to eliminate the use of "combination" as a Federal Procurement Data System-Next Generation contract type, effective for all new contract awards starting in fiscal year 2010. In addition, GAO found billions of dollars for which the contract type had been coded as "missing" in fiscal 2008.
GAO said that of the 92 contracts and orders it reviewed, about 30 percent did not include any documentation, and that inadequate accounting systems may result in the government making improper payments to contractors.
The report calls on the OFPP administrator to require procedures for contracting officers to determine if firmer contract pricing is needed on contract, and to somehow preclude data from being into the federal procurement data system if a contract type is not given.
