Office of Inspector General Audit Report: FAA Must Strengthen Its Cost and Price Analysis Processes to Prevent Overpaying for Noncompetitive Contracts: Project ID: ZA-2011-089

On May 19, 2011, we issued our final report on the Federal Aviation Administration's (FAA) cost and price analyses. The Office of Management and Budget emphasizes the importance of conducting effective cost and price analyses to avoid overpaying for high-risk noncompetitive contracts. Our audit objectives were to: (1) determine the extent to which FAA procurement offices used sufficient price analysis methods for noncompetitive contracts awarded within FAA; and (2) assess FAA's ability to adequately account for its noncompetitive contract awards. We found that FAA did not perform effective cost and price analysis for 8 of the 25 noncompetitive contracts we reviewed. We also found that FAA was unable to demonstrate that reasonable prices were paid for the eight contracts. Additionally, FAA did not accurately account for its noncompetitive contract awards because it does not have an effective contract writing system. We made six recommendations to improve FAA's cost and price analysis and its tracking of noncompetitive contract awards. FAA concurred with all recommendations and provided action plans to implement five of the recommendations. We requested that FAA provide us with a firm date for the action planned to implement the remaining recommendation.