Defense Plans Tighter Rein On Time-&-Materials Contracts The Defense Department is considering stricter controls on time-and-materials contracts in response to criticism by the Government Accountability Office. The auditors found DOD’s use of T&M contracts has more than doubled over the past ten years, but said the figure is considerably understated because it does not count task orders on GSA schedules and other IDIQ contracts. More than 80% of the T&M contracts were for task orders for professional, administrative and management services; IT; and equipment maintenance and repair, the report said. “Contracting officers’ written determinations almost never included a rationale as to why a less risky contract type could not be used, and little attempt was made to convert follow-on work to a less risky contract type,” the auditors said. GAO said time-and-materials contracts should be used only when no other contract type is suitable, because they give contractors no incentive to hold down costs. “DOD is turning to time-and-materials contracts because they can be awarded quickly and labor hours or categories can be adjusted if requirements are unclear or funding uncertain,” the auditors said. They also criticized contracting officers’ oversight of T&M contracts: “In general monitoring was based on contractor-provided monthly status reports showing the contractor’s activities and amount of funds expended.” In response to the findings, Shay Assad, director of defense procurement and acquisition policy, said he has opened rulemaking cases to determine whether additional controls are needed. Assad agreed with GAO’s recommendations that specific written justifications should be required for all T&M contracts, including task orders. He said he will direct the military services and DOD agencies to develop plans to analyze whether T&M contracts are being used as a default contract type. The report, “Defense Contracting: Improved Insight and Controls Needed Over DOD’s Time-and-Materials Contracts,” is available at www.gao.gov.