Audit of NSA's Award Fee Contracts

The National Security Agency Office of the Inspector General (OIG) released an unclassified version of its Audit of Award Fee Contracts. The OIG questioned all $636 million in award fees associated with 54 contracts examined during the audit. The OIG found that the Agency did not support either the use of award fee contracts, which are only to be used when contract performance cannot be measured objectively, or that the award fee percentages established under the contracts were properly justified, documented, and in the best interest of the Government. In addition, the Agency did not evaluate the effectiveness of its use of award fees. The OIG also found that the Agency's obligations for award fee contracts increased, while DoD is moving toward objective incentive arrangements. The OIG made three recommendations to assist the Agency in addressing these findings. The Agency agreed with all the recommendations and the OIG concluded that the actions planned by Agency management met the intent of the recommendations.