EPA IG wants fewer cost-plus contracts

The Environmental Protection Agency’s inspector general wants the agency to reduce its use of cost-plus-award-fee contracts due to overpayments of award fees and a lack of documentation.

The IG called for the agency to justify in writing its reasons for giving high-performance ratings to companies getting cost-plus contracts.

The IG found that EPA gave cost-plus contractors high grades and high award fees. The IG also found that of nine contracts it reviewed, EPA paid $16 million of the maximum $20 million available for award fees and gave 29 out of 32 contractors higher than satisfactory ratings. No contractor received an unsatisfactory rating.

“Because EPA consistently provided high ratings, we believe award fees are more of an expectation for contractors rather than a factor that motivates excellence,” the IG said in a Feb. 26 report.

The report also states that EPA’s documentation sometimes did not justify the ratings the agency awarded. For example, some contractors received higher ratings than their interim grades, and EPA did not explain why.

The IG also called for EPA to conduct cost-benefit analyses before awarding these contracts. The office found most cost-plus contracts required the agency to spend extra time and resources evaluating the contracts.

Office of Federal Procurement Policy Administrator Paul Denett sent a memo last Dec. 4 to agencies urging them to tie cost-plus awards to specific contractual objectives rather than grading contractors on effort.

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