DATE: March 22, 2000

FROM: Barry McVay, CPCM

SUBJECT: General Accounting Office; Few Competing Proposals for Large DOD Information Technology Orders

SOURCE: General Accounting Office (GAO) Report No. NSAID-00-56, March 20, 2000

SYNOPSIS: In a report to the Senate Armed Services Committee, the GAO found that most of the 22 large Department of Defense (DOD) orders it reviewed under multiple-award contracts for information technology (IT) products and services in support of defense programs "were awarded without competing proposals having been received. Agencies made frequent use of the statutory exceptions to the fair opportunity requirement. Further, contractors frequently did not submit proposals when provided an opportunity to do so."

EDITOR'S NOTE: GAO Report No. NSAID-00-56 is available on the Internet at http://www.gao.gov, by calling 202-512-6000, or by faxing to 202-512-6061.

For more on related testimony provided by GAO on March 16, 2000, see today's FEDERAL CONTRACTS DISPATCH "General Accounting Office; Trends, Reforms, and Challenges in Federal Acquisition."

For more on a related DOD Inspector General report, see the March 15, 2000, FEDERAL CONTRACTS DISPATCH "Department of Defense; Contracts for Professional, Administrative, and Management Support Services."

SUPPLEMENTAL INFORMATION: To promote competition under task- and delivery-order contracts,the Federal Acquisition Streamlining Act of 1994 (FASA) established a preference for awarding these contracts to multiple firms rather than to a single company. Orders placed under such contracts must clearly specify all the tasks to be performed or property to be delivered. In addition, agencies placing orders must ensure that each contractor is afforded a fair opportunity to be considered. However, FASA authorized exceptions to the fair opportunity process when (1) the agency's need for supplies or services is unusually urgent, (2) the agency's needs are so unique or specialized that only one contractor can provide the required quality, (3) placing the order on a sole-source basis will promote economy and efficiency because the order is a logical follow-on to a previous order issued competitively, or (4) the order must be placed with a particular contractor to satisfy a required minimum guaranteed amount.

The U.S. Senate Committee on Armed Services, Subcommittee on Readiness and Management Support, asked GAO to "examine DOD's use of large orders under multiple-award contracts to acquire information technology products and services and assess (1) whether contractors were provided a fair opportunity to be considered and the extent of competition realized and (2) how ordering offices met requirements to clearly specify the tasks to be performed or property to be delivered under the orders." GAO selected 22 orders over $5 million that were awarded for DOD requirements between October 1, 1997, and December 31, 1998, most of which involved IT services for ongoing defense programs. The following are GAO's major findings:

Based on its findings, GAO recommends that OFPP seek to develop and incorporate guidance to "make it clear that agencies should not (1) award follow-on orders whose scope or costs significantly exceed those of orders for which contractors were provided an opportunity to be considered, or (2) award large undefined orders and subsequently issue sole-source work orders for specific tasks; and encourage contracting officers to use fixed-price orders to the maximum extent practicable". GAO goes on to recommend that "the guidance encourage agencies to conduct more outreach activities when providing contractors an opportunity to be considered for orders" ("contractor representatives suggested that program officials and contracting officers could promote broader competition by conducting more outreach activities, such as meetings with potential contractors to explain program requirements, and obtaining feedback on contractors' capabilities").

OFPP, DOD, NIH, the Department of Transportation (DOT), and the General Services Administration (GSA) reviewed a draft of the report. Basically, OFPP and NIH concurred in the recommendations; DOD and GSA concurred except both questioned how effective "outreach activities" would be in encouraging contractors to submit proposals; and DOT did not respond.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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