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Competition is a critical tool for achieving the best return on the government's investment. While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award non-competitive contracts in certain situations. Agencies are also required to establish competition advocates to promote competition. This report assessed: (1) trends in non-competitive contracts and those receiving only one offer when competed; (2) exceptions to and factors affecting competition; (3) whether contracting approaches reflected sound procurement practices; and (4) how agencies are instituting the competition advocate role. Charts and tables. This is a print on demand publication.
The Department of Defense (DOD) class justifications included in GAO's sample were used primarily for the acquisition of weapon systems or related subsystems and components. About 77 percent covered specific weapon system development, production, sustainment, or modernization efforts; about 14 percent covered logistics support of multiple weapon systems or training systems; and the remaining 9 percent covered other requirements. Because weapon systems are typically used for many years, DOD officials told GAO class justifications provided an administrative efficiency by allowing one justification for multiple contracts that would essentially require the same justification. Most of the class justifications in GAO's sample had a total value of over $85.5 million and required approval at the highest level, the senior procurement executive of the DOD component. About 90 percent of the class justifications in GAO's sample cited only one responsible source to meet the requirements, generally because the contractor's ownership of proprietary technical data or expertise prevented the ability to compete the contract. The class justifications GAO reviewed generally cited the publication of notices of proposed contract actions on the Federal Business Opportunities website or market research to identify other qualified sources, neither of which identified other contractors that could meet the requirements. About 17 percent of the class justifications identified plans to compete future requirements. For example, three cited plans to acquire technical data to enable future competition and two cited efforts to break out some portion of the requirement for competition.
Observations on Sole-Source Procurement and Overruns
Participants in the federal 8(a) Business Development Program can receive low-value procurement contracts without competitive bidding; certain firms can receive contracts of any size. Concern over these firms' advantage led Congress to require a justification and approval process for contracts over $20 million. The effect is still emerging, but it may delay large contracts more than reduce the number awarded because the underlying need remains.
The Small Business Administration's 8(a) program is one of the federal government's primary vehicles for developing small businesses. Tribal 8(a) firms, such as firms owned by Alaska Native Corporations, can win sole-source contracts for any dollar amount in the 8(a) program, while other 8(a) firms generally must compete for contracts valued above certain dollar thresholds. In March 2011, the Federal Acquisition Regulation was amended to include a new requirement for a written justification for sole-source 8(a) awards over $20 million, where previously no justification was required. GAO has previously reported on tribal 8(a) contracting and recommended improved oversight. The Appropriations Act of 2015 contained a provision for GAO to assess the impact of the 8(a) justification at DOD. This report addresses: (1) trends among DOD sole-source and competitive 8(a) awards from fiscal years 2006 through 2015; and (2) the factors to which DOD officials attribute these trends. GAO analyzed data from the Federal Procurement Data System-Next Generation, reviewed 14 sole-source 8(a) contracts over $20 million-9 of which had been followed by additional contracts for the same requirement, and spoke with contracting officials. GAO judgmentally selected most of the 14 contracts from offices that had