"This audit is a follow-on to our audit of the award of the Navy Construction Capabilities (CONCAP) contract to Kellogg, Brown and Root (KBR). […] NAVFAC Southeast contracting officials did not effectively implement cost control procedures for three CONCAP contract task orders issued to KBR for recovery efforts associated with Hurricanes Ivan and Katrina. As a result, the Navy had no means to measure contractor cost performance on task orders totaling more than $229 million and was basically just monitoring the contractor's spend rate. Establishing basic contract forms, either the completion contract form or the term (or level-of-effort) contract form and implementing procedures to ensure contracting officials: (1) obtain and evaluate contractor cost estimates, (2) negotiate and base task order funding (and potential award fee) on the target cost of work requested, and (3) track how much is spent on each task and adjust task order funding (not the award fee) to actual performance costs, would allow the Navy to monitor how efficiently its infrastructure is repaired."
United States Dept. of Defense, Office of Inspector General: http://www.dodig.osd.mil/