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GAO: Agencies Should Look at Ways to Use Lower-Risk Contract Types

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The Government Accountability Office has recommended that the State Department, Social Security Administration and the Department of the Air Force evaluate measures they can take to find opportunities to reduce their use of labor-hour and time-and-materials contracts by converting all or parts of their requirements to firm-fixed-pricing.

GAO said in a report published Tuesday T&M contracts accounted for 11 percent of civilian agencies’ contract obligations between fiscal years 2017 and 2021, compared with 1 percent of Department of Defense’s obligations.

T&M contracts “are considered riskier since contractors bill the government by the hour and could conceivably work less efficiently so that they could charge more hours,” the GAO report reads.

According to the report, the U.S. government spent $139 billion on T&M contracts during the past five fiscal years.

The congressional watchdog also recommended that the State Department update its “Quality Assurance Plan policy by clarifying that a determination and findings justifying the use of a time-and-materials or labor-hour contract is required for orders placed under blanket purchase agreements.”