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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
12-P-0320
March 6, 2012
Why We Did This Review
We conducted this audit to
determine whether the U.S.
Environmental Protection
Agency (EPA) complied with
revisions made to the Federal
Acquisition Regulation (FAR)
for use of cost-reimbursement
contracts.
Background
The Duncan Hunter National
Defense Authorization Act for
fiscal year 2009 required the
FAR to be revised to address the
use of cost-reimbursement
contracts. The FAR was revised
on March 16, 2011. The
revisions provide additional
guidance on when cost-
reimbursement contracts are
appropriate, require agencies to
develop acquisition plans to
support the contract type
selection, and require agencies
to discuss the acquisition
resources necessary to award
and manage cost-reimbursement
contracts. A cost-reimbursement
contract is one in which a
contractor is paid based on the
occurrence of allowable costs.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2012/
20120306-12-P-0320.pdf
Policies Needed for Proper Use and
Management of Cost-Reimbursement
Contracts Based on Duncan Hunter Act
What We Found
EPA did not comply with several key revisions to the FAR as amended by the
interim rule, Proper Use and Management of Cost Reimbursement Contracts
(FAR Case 2008-030). Although EPA complied with several revisions, those
tended to be areas where the new rules expanded on requirements already in
existence. For example, we found that the contract files reviewed generally did
not have documentation of:
•	Discussions concerning minimizing the use of other than firm-fixed-
price contracts on future acquisitions for the same requirement;
•	Consideration as to whether portions of the contract could be
established on a firm-fixed-price basis; and
•	A written acquisition plan.
EPA did not always nominate or appoint contracting officer's representatives
(CORs) in writing. EPA program staff did not nominate the current COR for
two of the seven contracts in our sample, and contracting officers did not
appoint the current COR in writing for four of the seven contracts reviewed.
EPA improperly coded four indefinite-delivery/indefinite-quantity (ID/IQ) Task
Order contracts as cost-plus-fixed-fee contracts in EPA's contract writing
system and in the Federal Procurement Data System-Next Generation.
What We Recommend
We recommend that EPA develop a policy that provides a standardized
approach for preparing written acquisition plans to ensure compliance with the
new FAR revisions. We also recommend that EPA update the procurement
initiation notice to include a copy of the COR appointment memorandum and
direct contracting officers to verify that nomination forms and appointment
memorandums are included in all contract files. Further, we recommend that
EPA develop and distribute instructions on coding of ID/IQ contracts. EPA, in
its response to the draft report and at the exit conference, concurred with our
recommendations and provided milestone dates.

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