Audits

On February 27, 2008, we issued an interim report regarding the National Airspace System Implementation Support II Contract (NISC II) and the follow–on bridge contract. This interim report is a part of our ongoing audit of the Use of Cost–Plus–Award–Fee (CPAF) contracts within the Department. We found that FAA did not structure and implement the ongoing NISC II award–fee contract in a way that effectively motivated the contractor to improve performance and achieve acquisition outcomes–defined in terms of program costs, schedule, and performance. Additionally, FAA contracting officials did not justify the cost effectiveness of selecting a CPAF–type contract. FAA officials are implementing actions to meet the intent of our recommendations by clearly identifying measurable award–fee criteria for assessing contractor performance and linking the criteria to acquisition outcomes. We estimate that the planned corrective actions will put approximately $18.2 million in expected award fees for the bridge contract to better use by ensuring that FAA’s contract objectives are being met. We also recommend FAA acquisition officials reevaluate the use of award–fee contracts for future NISC procurements.