The act requires contractors and subcontractors to provide the government with cost or pricing data supporting their proposed prices and to certify that the data are accurate, complete, and current. These provisions are designed to give the government the information it needs to ensure fair and reasonable contract prices. . . may, without power of delegation, waive the requirement for submission of cost or pricing data in exceptional cases.”The waiver provision also states that the head of the contracting activity “may consider waiving the requirement if the price can be determined to be fair and reasonable without submission of cost or pricing data.” Aside from stating that a waiver may be considered in this situation, the regulation provides no further guidance on the circumstances that would warrant a waiver. DOD’s Use of Waivers for Certified Data

Using DOD’s contract database, we identified 20 waivers valued at more than $5 million each in fiscal year 2000. The total value of these waivers was about $4.4 billion. Reasons Why Waivers Were Used

Contract pricing or waiver documents for all of the cases we reviewed stated that sufficient information was available to determine the price to be fair and reasonable without the submission of cost or pricing data and did not cite other circumstances to justify the waivers. The Truth in Negotiations Act does not define exceptional cases and the regulatory guidance is limited. Second, DOD does not have guidance that would help buying organizations draw the line between what type of data and analyses would be acceptable or not and what kinds of outside assistance, such as DOD contracting and pricing experts, should be obtained. Our analysis showed that there was a wide spectrum in the quality of the data and analyses being used.
What GAO Found

Although most federal contracts are awarded through competition, the government also buys unique products and services, including sophisticated weapons systems, for which it cannot always rely on competition to get the best prices and values. Instead, it uses a single source for its procurements. In these cases, contractors and subcontractors provide the government with cost or pricing data supporting their proposed prices and certify that the data submitted are accurate, complete, and current, as required by the Truth in Negotiations Act. This ensures that the government has the data it needs to effectively negotiate with the contractor and avoid paying inflated prices. The government can waive the requirement for certified data in exceptional cases. In these instances, contracting officers use other techniques to arrive at fair and reasonable prices. Using the Department of Defense's (DOD) contract database, GAO found 20 waivers, each valued at more than $5 million, in fiscal year 2000. The total value of these waivers was $4.4 billion. In each case, the contract pricing or waiver documents stated that sufficient information was available to determine the price to be fair and reasonable without the submission of cost or pricing data. There was a wide variety in the quality of the data and analyses being used, from very old to very recent data. Despite the range of techniques employed to arrive at a price, DOD does not have guidance that would help buying organizations determine acceptable data and analyses and what kinds of outside assistance, such as contracting and pricing experts, should be obtained.