PBGC - Office of Inspector General

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PBGC Needs to Improve Incentive Contracting Practices (AUD-2020-11), issued September 23, 2020

We found that PBGC’s Procurement Department (PD) administered the CPAF contract in a manner inconsistent with the FAR by not designing performance metrics for two key factors required for an aggregate measure of performance. Based on the absence of support for the cost and schedule elements, we have classified the $5.1 million for award fees paid under the contract as unsupported. Further, PD allowed the contractor, in violation of the contract terms, to misclassify labor as “other direct cost,” and did not take corrective action on a key person provided by the contractor who did not meet the minimal educational qualifications identified in the contractor’s proposal. Last, PD lacked internal controls over contract file maintenance, as it did not follow the existing file room check-in/out procedure. As a result, PBGC’s position in contract administration was weakened.

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