DOD OIG Recommends Remedies for Issues Concerning Management of Cost-Plus-Award-Fee Contracts

The Department of Defense’s Office of Inspector General has issued a report offering 12 recommendations to contracting officials to address concerns regarding the management and administration of cost-plus-award-fee contracts, known as CPAF.

Released Wednesday, the report suggests implementing a process for calculating the contractor’s award fees in accordance with the approved award-fee plan criteria; recalculating the prior award-fee amounts earned by the contractor to identify overpayments; and establishing a platform to accurately capture all relevant cost-plus-award-fee data.

The OIG made the recommendations after reviewing 27 CPAF contracts to determine how the department’s contracting officials oversee such contracts.

According to the report, such officials provided effective oversight of vendors’ performance and justified award fees paid for CPAF contracts.

However, the report found that contracting officials failed to properly justify award fees paid for three contracts and did not comply with DOD and federal policies when conducting management and administration for 78 percent of the reviewed 27 CPAF contracts.

“The findings in this audit illustrate the need for the DoD to improve its contracting practices,” commented Robert Storch, inspector general of the DOD. “Robust justifications for award fees paid to contractors reduce the risk that contractors are paid more than they earned.”