ES, IG-99-056, NASA Noncompetitive Procurements

NASA NONCOMPETITIVE PROCUREMENTS
IG-99-056

Executive Summary

Background
NASA obligated significant funds in fiscal year (FY) 1998 to noncompetitive new awards and to modifications of noncompetitive awards made in FY 1998 and prior years. NASA's FY 1998 procurement obligations totaled more than $12.5 billion, of which about $9.7 billion was available for competition. Of the $9.7 billion, NASA obligated more than $4.4 billion (45 percent) for noncompetitive procurement actions. NASA prepares a Justification for Other than Full and Open Competition (JOFOC) for a noncompetitive procurement to support the use of noncompetitive procedures. Appropriate officials certify the JOFOC for completeness and accuracy. As part of its oversight duties, the NASA Headquarters Office of Procurement conducts survey reviews at NASA installations that address, in part, noncompetitive procurements.

Objectives
The overall objective of our audit was to determine whether NASA awarded its FY 1998 noncompetitive awards and made modifications in accordance with the requirements of the Federal Acquisition Regulation (FAR) and the NASA FAR Supplement. Our specific objectives were to determine whether:

technical analyses were adequate and allowed the contracting officer (CO) to negotiate a fair and reasonable price and
the pricing of noncompetitive purchase order awards was reasonable.
Appendix A contains further details on the audit objectives, scope, and methodology.

Results in Brief
NASA's noncompetitive procurement actions at the Ames Research Center (Ames), John H. Glenn Research Center (Glenn Research Center), Goddard Space Flight Center (Goddard), and the Johnson Space Center (Johnson) were adequately supported by JOFOC's. The JOFOC's generally identified the appropriate statutory authority and contained sufficient facts to support other than full and open competition. We commend the NASA Headquarters Procurement Management Survey Report teams for their ongoing JOFOC reviews during procurement surveys. The Procurement Division at Glenn Research Center also reviews JOFOC's annually. We believe these oversight activities have significantly improved the quality of the JOFOC's.
However, technical analyses for 17 of the 40 noncompetitive procurement actions at 3 (Glenn Research Center, Goddard, and Johnson) of the 4 Centers reviewed were inadequate. Analyses performed at Ames were adequate. Further, the CO at Johnson did not request technical assistance for a modification made to the International Space Station (ISS) contract (see Appendix C). Therefore, the CO's ability to develop a sound and supportable prenegotiation position and to obtain more favorable award prices may have been weakened (see Finding A). Of the remaining 21 analyses, 9 contained findings by the analyst. The CO's properly dispositioned the findings in all nine cases. We commend the CO's for their disposition efforts.
In addition, 38 of the 65 noncompetitive purchase order awards at 3 (Glenn Research Center, Goddard, and Johnson) of the 4 Centers reviewed did not contain the documentation supporting determinations of price reasonableness required by the FAR. Therefore, NASA management and procurement supervisory staffs lack assurance that the Agency paid a fair and reasonable price for supplies and services (see Finding B).

Recommendations
The CO's and technical analysts should communicate more to improve the quality and usefulness of technical analyses. The CO should provide regulations, guidance, and prior technical reports to analysts for reference purposes. Further, analysts should document all fact-finding meetings to better support their conclusions. Lastly, management should ensure that CO's and purchasing agents receive refresher training on the documentation required to adequately support pricing decisions on noncompetitive purchase order awards.

Management's Response
Management concurred with all the recommendations. NASA management will reemphasize the importance of quality technical analyses. NASA will also provide training relative to technical analyses and the pricing of noncompetitive purchase order awards. The complete text of the response is in Appendix D. We consider management's comments responsive.

Background	NASA obligated significant funds in fiscal year (FY) 1998 to noncompetitive new awards and to modifications of noncompetitive awards made in FY 1998 and prior years. NASA's FY 1998 procurement obligations totaled more than $12.5 billion, of which about $9.7 billion was available for competition. Of the $9.7 billion, NASA obligated more than $4.4 billion (45 percent) for noncompetitive procurement actions. NASA prepares a Justification for Other than Full and Open Competition (JOFOC) for a noncompetitive procurement to support the use of noncompetitive procedures. Appropriate officials certify the JOFOC for completeness and accuracy. As part of its oversight duties, the NASA Headquarters Office of Procurement conducts survey reviews at NASA installations that address, in part, noncompetitive procurements.
Objectives	The overall objective of our audit was to determine whether NASA awarded its FY 1998 noncompetitive awards and made modifications in accordance with the requirements of the Federal Acquisition Regulation (FAR) and the NASA FAR Supplement. Our specific objectives were to determine whether: technical analyses were adequate and allowed the contracting officer (CO) to negotiate a fair and reasonable price and the pricing of noncompetitive purchase order awards was reasonable. Appendix A contains further details on the audit objectives, scope, and methodology.
Results in Brief	NASA's noncompetitive procurement actions at the Ames Research Center (Ames), John H. Glenn Research Center (Glenn Research Center), Goddard Space Flight Center (Goddard), and the Johnson Space Center (Johnson) were adequately supported by JOFOC's. The JOFOC's generally identified the appropriate statutory authority and contained sufficient facts to support other than full and open competition. We commend the NASA Headquarters Procurement Management Survey Report teams for their ongoing JOFOC reviews during procurement surveys. The Procurement Division at Glenn Research Center also reviews JOFOC's annually. We believe these oversight activities have significantly improved the quality of the JOFOC's. However, technical analyses for 17 of the 40 noncompetitive procurement actions at 3 (Glenn Research Center, Goddard, and Johnson) of the 4 Centers reviewed were inadequate. Analyses performed at Ames were adequate. Further, the CO at Johnson did not request technical assistance for a modification made to the International Space Station (ISS) contract (see Appendix C). Therefore, the CO's ability to develop a sound and supportable prenegotiation position and to obtain more favorable award prices may have been weakened (see Finding A). Of the remaining 21 analyses, 9 contained findings by the analyst. The CO's properly dispositioned the findings in all nine cases. We commend the CO's for their disposition efforts. In addition, 38 of the 65 noncompetitive purchase order awards at 3 (Glenn Research Center, Goddard, and Johnson) of the 4 Centers reviewed did not contain the documentation supporting determinations of price reasonableness required by the FAR. Therefore, NASA management and procurement supervisory staffs lack assurance that the Agency paid a fair and reasonable price for supplies and services (see Finding B).
Recommendations	The CO's and technical analysts should communicate more to improve the quality and usefulness of technical analyses. The CO should provide regulations, guidance, and prior technical reports to analysts for reference purposes. Further, analysts should document all fact-finding meetings to better support their conclusions. Lastly, management should ensure that CO's and purchasing agents receive refresher training on the documentation required to adequately support pricing decisions on noncompetitive purchase order awards.
Management's Response	Management concurred with all the recommendations. NASA management will reemphasize the importance of quality technical analyses. NASA will also provide training relative to technical analyses and the pricing of noncompetitive purchase order awards. The complete text of the response is in Appendix D. We consider management's comments responsive.