Money for Nothing

Dire Straits

...and Chicks for Free

A report released today by the Government Accountability Office (GAO) found that few federal agencies follow recently revised guidelines set forth by the Office of Management and Budget (OMB) for awarding contract bonus fees, wasting billions of taxpayer dollars per year.

The report, requested by Sens. Tom Carper (D-DE), Bernie Sanders (I-VT), John McCain (R-AZ) and Tom Coburn (R-OK), found that while a few agencies have improved their award fee practices, many others still lag behind. Notably, the Department of Defense (DOD) and the National Aeronautics and Space Administration (NASA) have made progress from simply shelling out bonuses with no cause as they did in the past, but the other top contracting federal agencies, such as the Departments of Energy (DOE), Health and Human Services (HHS), and Homeland Security (DHS) lag woefully behind.

The report evaluated agencies on three criteria:

  • The actions agencies have taken to revise or develop policies and guidance to reflect OMB guidance on using award fees.
  • Whether the agencies' current practices for using award fee contracts are consistent with the new guidance.
  • The extent that agencies are collecting and analyzing information on award fees to evaluate their use and sharing that information within their agencies.

The findings were unsatisfactory, to say the least:

Current agency practices for using award fee contracts often are not consistent with the new OMB guidance.


Agencies do not always follow OMB’s guidance on linking fees to demonstrated results.


Of the five agencies...reviewed, only DOD collects data on the use of award fees.


Agencies generally do not have an effective mechanism with which to evaluate the effectiveness of award fees as a tool for improving contractor performance and achieving desired program outcomes.

Of course, the good news, which is a no-brainer to those of us in the contracting reform racket, is that where agencies implemented strict controls over award fee contracts, the government saved millions of dollars. Now if we could just get these reforms spread throughout government, we could solve the problem and I could move on to ending world hunger.

Image by Flickr user Jacob Whittaker used under a Creative Commons license.

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