Among the DOD components in our study, the Army had the  highest competition rate in fiscal year 2013, while MDA had the lowest. Competition Rate Has Stopped Declining and Varies by Component

Between fiscal years 2009 and 2013, DOD’s competition rate—based on  all contract obligations—declined by 5 percent, from 62 percent to 57  percent, with an average competition rate of 59 percent for the 5 year  period (see figure 3). Competed obligations decreased by  over $31 billion, from $205.6 billion in fiscal year 2012 to $174.2 billion in  fiscal year 2013. The percent obligated on new noncompetitive contracts and task orders  on single award contracts as reported in FPDS-NG under the “only one  responsible source” exception has increased—from 66 percent in fiscal  year 2009 to 72 percent in fiscal year 2013. In some cases the justifications provided insight as to how a  lack of the right level of data rights resulted in complete reliance on a  single vendor over time. Justifications Generally Contained the Required Elements

As required by the FAR, DOD contracting officials prepared written  justifications for all 14 noncompetitive contract awards in our sample. Lack of Necessary Data Rights Is Frequently a Barrier to Competition and Results in Reliance on a Single Vendor

All 14 noncompetitive contracts and task orders within our sample were  justified under the exceptions for competition of “only one responsible  source or “only one source capable.” For half of these awards, the basis  for this exception was the agency’s lack of data rights. Focus on the Use of Open Systems Architectures and Emphasis on Data Rights Help to Guide Program Behavior

The focus on open systems architecture and acquiring effective types of  data rights is changing the way DOD acquires goods and services. Programs are moving away from dependency upon single suppliers for  parts, maintenance or upgrades and are moving toward open systems;  these are designed to allow components to be added, removed, modified,  replaced or maintained by multiple suppliers. The programs we sampled  illustrate that leveraging open systems architecture and data rights to help  promote competition involves early consideration and extensive analysis  of how each system can best use these approaches to maintain a  competitive environment throughout a program’s life cycle. For example,  according to program officials the BBP’s emphasis on open systems  architecture and effective management of data rights resulted in  increased competition for the Air Force’s Military Global Positioning  System User Equipment and KC-46 Tanker Modernization programs. DOD’s One-Offer Requirements Are Focused Late in the Acquisition Process

In 2010, DOD introduced new requirements for when full and open  competition results in only one offer; however, these rules, as  implemented in the DFARS, are focused late in the acquisition process  and DOD officials have limited insight into the reasons only one offer was  received. The one-offer awards we reviewed complied with DOD’s rules  which require contracting officers to ensure solicitation periods allow at  least 30 days for receipt of proposals and to conduct cost or price  analysis. DOD contracting officials and vendors told us  that engagement well before the 30-day solicitation period is key to  ensuring vendors have adequate time to review draft requests for  proposals, plan resources, provide feedback on potentially restrictive  requirements, and determine through internal management processes  whether it is worthwhile to prepare proposals. For the awards we reviewed, however, contracting  officers seldom collected information about reasons only one offer was  received, which could limit their ability to revise acquisition strategies  appropriately or plan for future competitive acquisitions. There is  no requirement to engage with the vendor community to learn why they  chose not to submit offers. DOD also has established a goal of increasing effective competition— where competitive procedures are used and more than one offer is  received. Enhancing the department’s  acquisition planning guidance to ensure enough time and attention are  provided for early vendor engagement could help encourage multiple  offers. Establish guidance for when contracting officers should assess and  document the reasons only one offer was received on competitive  awards, including reviewing requirements to determine if they are  overly restrictive and collecting feedback from potential vendors about  the reasons they did not submit offers, taking into account dollar value  and the likelihood the requirement is a recurring need. In  written comments, DOD concurred with our recommendations. Staff who made key contributions  to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives for this review were to examine (1) the trends in DOD’s  use of competitive awards, (2) the extent to which justifications for  exceptions to competitive procedures were adequate and the reasons for  the exceptions, (3) how DOD’s strategies aimed at promoting long-term  competition are changing behavior, and (4) the extent to which DOD’s  recent requirements address the reasons why only one offer was  received for competitive solicitations.
Why GAO Did This Study

Competition is the cornerstone of a sound acquisition process. In fiscal year 2013, DOD obligated over $300 billion through contracts and orders, of which 57 percent was competed. DOD also obligates billions of dollars annually on contracts that are awarded using competitive procedures, but for which the government received only one offer. DOD implemented the Better Buying Power initiative in 2010, in part to increase competition. The conference report accompanying the National Defense Authorization Act for Fiscal Year 2012 mandated GAO to report on DOD's noncompetitive and one-offer awards.
GAO examined (1) the trends in DOD's use of competitive awards, (2) the extent to which justifications for exceptions to competitive procedures were adequate and reasons for exceptions, (3) how DOD's strategies aimed at promoting long-term competition are changing behavior, and (4) whether DOD's requirements address reasons only one offer was received for competitive solicitations. GAO analyzed federal procurement data for fiscal years 2009 through 2013; reviewed DOD policy and competition reports; examined two nongeneralizable samples of 14 and 15 awards, in part, based on dollar value; and interviewed DOD officials.

What GAO Found

The Department of Defense's (DOD) competition rate for all contract obligations declined over the past 5 fiscal years from 62 percent in fiscal year 2009 to 57 percent in fiscal year 2013, but remained flat for the past 2 years. In fiscal year 2013, the Army had the highest competition rate, 66 percent, while the Missile Defense Agency had the lowest competition rate, 29 percent. The 14 justifications for noncompetitive awards that GAO reviewed generally included the elements required by the Federal Acquisition Regulation such as the authority permitting other than full and open competition. The majority of DOD's noncompetitive contracts and task orders (including all in GAO's sample) were coded under the “only one responsible source” exception to competition requirements. Seven of the 14 justifications explained that the awards could not be competed due to a lack of technical data. In these cases, DOD did not purchase the necessary data rights with the initial award. In some cases the justifications provided insight into how a lack of data rights resulted in reliance on a single vendor over time.
DOD's focus on using open systems architecture and acquiring sufficient data rights—which DOD's Better Buying Power memo encourages—is influencing the way DOD acquires goods and services. Programs are trying to move away from dependency upon single suppliers for parts, maintenance or upgrades and are moving toward open systems architecture, which allows components to be modified, replaced or maintained by multiple suppliers. Some DOD programs have shown that using open systems architecture and obtaining data rights involves early consideration and extensive analysis of how each system can best use these approaches to maintain a competitive environment throughout a program's lifecycle. For example, an emphasis on open systems architecture and effective management of data rights resulted in increased competition for the Air Force's user equipment for the Global Positioning System and KC-46 Tanker Modernization programs.
In 2010, DOD introduced requirements for competitive solicitations that result in only one offer; however, these rules are focused late in the acquisition process and DOD has limited insight into the reasons only one offer is received. The 15 one-offer awards GAO reviewed generally satisfied DOD's rules, which require contracting officers to ensure adequate solicitation periods and conduct cost or price analysis. These rules were intended to help ensure more effective competition but may apply too late in the acquisition process. DOD contracting officials and vendors told GAO that engagement with vendors well before the 30 day solicitation period is key to ensuring vendors have adequate time to review draft requests for proposals, plan resources, provide feedback on potentially restrictive requirements, and determine whether to prepare proposals. Moreover, contracting officers for the contracts GAO reviewed seldom collected information about reasons only one offer was received, which could limit their ability to revise acquisition strategies appropriately or plan for future competitive acquisitions. DOD's one-offer rules do not require contracting officials to engage with the vendor community to learn why vendors chose not to submit offers. However, contracting officials chose to do so in two sample cases, and in one case, based on this information, changed the acquisition strategy to allow for recompetition sooner than planned.

What GAO Recommends

DOD should ensure that existing acquisition planning guidance promotes early vendor engagement, and establish guidance for when contracting officers should assess the reasons only one offer was received on competitive awards. DOD concurred with these recommendations.