FAA's Competitive Award Practices Expose Its Major Program Contracts to Cost and Performance Risks

What We Looked At In support of its mission to operate the National Airspace System, the Federal Aviation Administration (FAA) relies on an expansive portfolio of capital assets—including infrastructure, technology, and systems. These capital investments contribute to the multibillion-dollar acquisition portfolio that FAA manages each fiscal year. Over the years, various stakeholders have identified significant issues with the Agency’s acquisition processes and practices. Citing those concerns, Representative Bill Shuster, then Chairman of the House Committee on Transportation and Infrastructure, asked us to conduct a review. Accordingly, our audit objective was to assess FAA’s competitive award practices for its major acquisition program contracts, including safeguards against conflicts of interest (COI) on the part of FAA officials involved in the award process.   What We Found FAA’s competitive award practices for its major program contracts expose the Agency to cost and performance risks. First, FAA’s actions to establish fair, reasonable, and realistic contract pricing lack sufficient support—specifically, independent Government cost estimates (IGCE) and price analyses, both of which are key to efficient pricing. Second, FAA’s award practices for its major program contracts do not always promote competition, which could contribute to the Agency’s continued reliance on the same small pool of contractors. Third, FAA is putting the integrity of its procurement process at risk because it does not consistently take required actions to prevent COI. For example, FAA could not provide complete COI agreements for all the officials involved in the selection process for five contracts with a total value of over $1 billion. Finally, FAA lacks complete award documentation and a tracking process for its major program contracts, which impacts its ability to manage potential cost and schedule risks. We determined that FAA put up to $4.9 billion in Federal funds at risk because it did not have required IGCEs before it awarded three competitive contracts and did not provide a sound rational basis for awarding another three contracts noncompetitively.   Our Recommendations FAA concurred with all 10 of our recommendations to improve its major program contract award practices and provided appropriate completion dates.