Read the Letters! Is There a Problem Here? If So, What's the Solution?

[bob7947]

Here is a letter from Senator Warren and Congressman John Garamendi about contract pricing.

[here_2_help]

Hmmm. If I interpreted the allegations correctly, the Hon. Senators are saying that DOD is conspiring with Transdigm to make only small (less than $2 Million) orders for spare parts, rather than buy in quantities that would require submission of certified cost or pricing data. Seems to me that decision would be within the discretion of the KO.

And as for Boeing, they seem to allege that the company is using subsidiaries in some fashion to avoid providing cost or pricing data. I'm not sure how -- maybe by claiming commercial item status? In any case, the letter then says Boeing IS providing the data upon request, so I'm not really sure what the issue is.

Looking forward to receiving enlightenment. 

[formerfed]

Not trying to downplay significance, but relying upon cost or pricing data is used as a crutch way too often.  There are many other ways to evaluate cost/price reasonableness before resorting to requesting cost or pricing data.

Contracting Officers are required to determine fair and reasonable prices before award of any contract.  Just requesting pricing data from offerors and use of audit reports without doing anything more can give a good feeling but does that really ensure a fair and reasonable price?  DoD has some excellent personnel (finance and technical) that can assist contracting staff as well in deterring what’s a fair price.  But they are rarely used.

Certainly the Senators have valid concerns expressed in their letter.  But the government may not be doing their best job either.  If a company can’t or won’t provide data, it seems like other tools at the contracting staffs disposal aren’t always used. 

One point in the letter that’s kind of humorous is the statement that Transdigm refused to provide information on the number of transactions that fell above and below TINA thresholds.  Shouldn’t the government already know that?

 

 

[Retreadfed]

I noticed there were several references to DODIG reports.  I am suspicious of such reports because in my experience the DODIG has been against the commercial item exception to the submission of certified cost or pricing data.  Further, when the threshold was raised from $100K to $500K the DODIG did everything it could to stop that action.  The IG's argument was based on the situation at one aircraft parts supplier.  For years, the supplier had been selling parts to DoD and providing cost or pricing data.  At the same time, it was providing similar parts to manufacturers and repairers of commercial aircraft at significantly higher prices.  The saying at the time was if it flies in the free world it has parts from that parts manufacturer.  Based on this one circumstance, and its fear that DoD would pay more for the parts it had been buying from this contractor, the DODIG opposed raising the threshold and creating a commercial item exception to the submission of certified cost or pricing data.