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Audit (A-02-09-02005)

11-12-2010
Review of the Centers for Disease Control and Prevention's Compliance With Appropriations Laws and Acquisition Regulations-Contractor B

Executive Summary

In this congressionally requested review, we found that a 2002 CDC research and development contract awarded to a company referred to as "Contractor B" did not fully comply with appropriations laws and acquisition regulations with respect to pricing. Specifically, CDC did not perform cost analyses for four contract modifications that exceeded $650,000 each and that totaled $10.9 million. The failure to perform cost analyses occurred because CDC did not adhere to its policies and procedures for determining the reasonableness of contract modifications. By failing to perform cost analyses, CDC violated the Federal Acquisition Regulation. As a result, CDC did not ensure that it obtained vaccine safety research studies at fair and reasonable prices.

The contract complied with appropriations laws and acquisition regulations with respect to competition, inherently governmental functions, personal services, subcontracting, additional performance activities, and contract funding.

We recommended that CDC adhere to its procedures for performing cost analyses on contract modifications exceeding $650,000 each. CDC concurred with this recommendation but disagreed with the finding in our draft report that $290,000 was obligated in excess of available funds and with the related recommendations. After reviewing CDC's comments and additional documentation, we agreed that the $290,000 was properly certified, and we revised our final report accordingly.

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