For the same 5-year  period, the percentage of obligations reported for noncompetitive  contracts decreased, from 35.6 percent to 31.2 percent of total obligations,  while those reported under contracts that were competed with one offer  received (noncompetitive procurements using competitive procedures)  were steady, at about 13 percent of total obligations. Of the 10 contracts and orders that were incorrectly coded as competed  with one offer received, 4 had not been competed at all. For services supporting DOD weapons programs, the  government’s lack of access to proprietary technical data and a heavy  reliance on specific contractors for expertise limit, or even preclude the  possibility of, competition. Even for some procurements using competitive  procedures, a strong incumbent coupled with overly restrictively written  requirements can lead to only one offer—from the incumbent—being  received. In other cases, groups of vendors have formed teams to compete  for government requirements. Contracting officials and contractors told us  that whereas previously several vendors might have submitted offers for  more specific requirements, now only one offer—from the prime  contractor on the team—is being received. Some Contracting Approaches Did Not Reflect Sound Procurement or Management Practices

In reviewing the contracts in our sample, we identified contracting  approaches for nine contracts or orders that did not reflect sound  procurement or management practices, in some cases not leveraging the  effectiveness of the market place. These approaches included ambiguously  written justifications for noncompetitive contracts, very limited  documentation of the reasonableness of contractors’ proposed prices,  instances where the contract’s cost grew significantly, and labor  categories that were improperly authorized because they were not  included in the contract. The advocates are to carry out a number of broad  responsibilities, including    promoting full and open competition and challenging barriers to  competition,  reporting to the agency’s senior procurement executive and chief  acquisition officer on opportunities and actions taken to achieve  competition, as well as conditions or actions that unnecessarily restrict it,  such as unnecessarily detailed specifications or restrictive statements of  work, and  recommending to the senior procurement executive and chief acquisition  officer a “system of personal and organizational accountability” for  competition, which may include recognition and awards to program  managers, contracting officers, or others. Apart from these duties, agencies are left with much discretion regarding  where in the organization the competition advocates should be placed,  who should be appointed to this position, and how they should carry out  their responsibilities. Some agency officials we spoke with said that,  because the FAR is vague in this regard, and especially given the current  emphasis on competition, more guidance related to this position could be  helpful. For the agencies in our review, we found a range of approaches to  the competition advocate position and placement, skills and expertise, and  methods of implementing their responsibilities. The Director, Defense  Procurement and Acquisition Policy, stated that, in general, he agrees with  our findings and recommendations concerning opportunities to increase  competition in cases where only one offer is received (a situation DOD  terms “ineffective competition”). Appendix I: Scope and Methodology

The objectives of this review were to assess (1) the extent to which  agencies are awarding noncompetitive contracts and contracts awarded  competitively with only one offer received; (2) the exceptions to  competition that agencies used when awarding noncompetitive contracts;  (3) factors that affect competition in federal contracting; and (4) the  extent to which the contracting approaches for the contracts in our  sample reflected sound procurement or management practices. In  addition, we identified the fiscal year 2008 obligations under contracts  where only one offer had been received. As discussed in the first objective in this report, we found that about 18  percent of the contracts or orders had been miscoded as either competed  or not competed. To determine how agencies are instituting the role of the competition  advocate, we reviewed statutory and FAR provisions, Office of  Management and Budget and Office of Federal Procurement Policy  memorandums (such as the May 2007 memorandum on reinvigorating the  role of the competition advocate), pertinent agency regulations and  guidance, and the annual competition reports for fiscal years 2008 and  2009 for the agencies in our review.
Why GAO Did This Study

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 noncompetitive contracts in certain situations. Agencies are also required to establish competition advocates to promote competition. GAO assessed (1) trends in noncompetitive 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. GAO reviewed federal procurement data and 107 randomly selected contracts at the departments of Defense, Interior, and Homeland Security (which had among the highest noncompetitive obligations in fiscal year 2008) and interviewed contracting and program officials, competition advocates, and contractors.

What GAO Found

From fiscal years 2005 to 2009, reported obligations for noncompetitive contracts decreased from about 36 to 31 percent of total obligations, while obligations under contracts competed with only one offer received were steady, at about 13 percent of the total in each year. In comparing the data in the federal procurement data system to the information in contract files, we found that about 18 percent of the contracts sampled were coded incorrectly--as either not competed when they had been, or as competed with one offer received when they had not been competed at all. Agencies used a variety of exceptions to competition for the contracts and orders in our sample, with the two most common being "only one responsible source" and sole-source awards under the Small Business Administration's 8(a) business development program. For services supporting DOD weapons programs, the government's lack of access to proprietary technical data and decades-long reliance on specific contractors for expertise limit--or even preclude the possibility of--competition. In other cases, program offices may press for contracts to be awarded to the incumbent contractor without competition, largely due to their relationship and the contractor's understanding of program requirements. For competitive procurements where only one offer is received, factors include a strong incumbent, sometimes coupled with overly restrictive government requirements, or vendors forming large teams to submit one offer for broader government requirements, whereas previously several vendors may have competed. Contracting approaches for nine contracts reviewed did not reflect sound procurement practices and in some instances sound management practices, in some cases not leveraging the effectiveness of the market place. These approaches included ambiguously written justifications for noncompetitive contracts, very limited documentation of the reasonableness of contractors' proposed prices, instances where the contract's cost grew significantly or where labor categories were improperly authorized, and undefinitized contract actions that did not meet definitization requirements. Agencies have much discretion regarding where in the organization the competition advocates should be placed, who should be appointed to this position, and how they should carry out their responsibilities. As a result, agencies have taken a range of approaches regarding the placement of the competition advocates, their skills and expertise, and the methods they use to carry out their responsibilities. Some advocates cited their experience in program offices as helping them to question requirements that may be overly restrictive, while others had been contracting officers or procurement policy officials before assuming the position. Some agency officials said that regulations are vague regarding the role of the competition advocate, and that given the Office of Federal Procurement Policy's (OFPP) recent emphasis on competition, they would like to see more guidance on competition advocate roles and methods of implementing their duties.

What GAO Recommends

GAO recommends that OFPP take actions regarding assessment of the reasons only one offer is received and issue guidance on competition advocate roles, including their direct involvement with program offices to seek opportunities for competition. OFPP agreed with the recommendations, and DOD generally agreed with our findings and recommendations. Other agencies provided technical comments.