GAO finds more than 30 percent of Pentagon spending went to non-competitive awards in fiscal 2012.
Competition is the ideal, but an audit shows that DOD often sidesteps the process. (Stock image)
The Defense Department held fewer competitions for contracts in fiscal 2012 than in 2008, declining in total by 5.5 percent during the four-year span, according to a report released March 28. The majority of the non-competitive contract awards were tagged as having only a single company able to do the work, justifying a sole-source award.
In fiscal 2012, DOD obligated $359 billion through contracts and task orders, of which $205.3 billion, or 57 percent, went to competitive awards. In 2008, DOD obligated 62.6 percent of its money through the competitive process, the Government Accountability Office found in its analysis of spending data.
The 2012 competition rate varied widely across the services.. The Air Force had the lowest competition rate at 37.1 percent. The Defense Logistics Agency had the highest rate at 83.3 percent.
Defense officials have several factors that affect their attempts to reach competition goals. The department may rely too much on an original equipment manufacturer; GAO concluded that this has been a long-standing challenge for officials. The rate also is affected when DOD buys on behalf of a foreign government.
GAO wrote that DOD does not consider such factors as it sets annual competition goals. Instead, it adds two percentage points to what it did the prior year.
Reasons given to justify sole-source contracts. (GAO graphic)
"Without identifying and tracking the specific factors affecting competition DOD cannot set meaningful goals for improving competition or accurately gauge its progress toward achieving them," GAO wrote.
In response to GAO, Richard Ginman, director of procurement and acquisition policy at DOD, wrote that he would consider such factors when setting future goals.
GAO had another issue with DOD, as it faces a high number of competitions where only a single company could responsibly handle the work: the Pentagon's procurement workforce does not keep reliable records. GAO recommended defense officials push the military branches to collect reliable data these types of contracts.
In 2010, under DOD’s Better Buying Power initiative, officials considered any solicitation in which DOD received just one bid an "ineffective competition." A contracting officer would have to revamp the requirements and put the work out for bid for another month.
That policy remains in place, but the data are not there. The poor data-collection prevents officials from determining if the policy, in fact, works.
With better records, "the department could better determine the effects of its new requirement on one-offer contracts," GAO wrote. "The impact of the requirement is unknown because of unreliable data."
In an analysis of 35 one-offer awards, GAO’s auditors found contracting officers had incorrectly coded 10 of the awards in the procurement database that DOD relies on to measure the impact of its new requirement. But six of the 10 awards were noncompetitive awards, and the remaining four had received multiple offers.
"As a result, GAO determined that DOD’s data cannot be used to accurately calculate the amount obligated on one-offer awards during fiscal year 2012," GAO wrote.
Ginman assured auditors he would review training policies and then update guidance to improve the quality of the information entered into the Federal Procurement Data System. In addition, he wrote, officials would raise the issue at competition advocates’ meetings in the future.
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