An agency may also  award a contract noncompetitively when the need for goods and services  is of such an unusual and compelling urgency that the federal  government faces the risk of serious financial or other injury. Agencies Used the Urgency Exception to a Limited Extent and Procured a Range of Goods and Services, but Data Reliability Is Questionable

		DOD’s, State’s, and USAID’s Use of the Urgency Exception Is Small Compared to Other Exceptions to Competition

Based on data from FPDS-NG, DOD, State, and USAID obligations for  contracts and task orders reported as using the urgency exception during  fiscal years 2010 through 2012 were small relative to other exceptions to   Of the $998 billion that DOD obligated for all  full and open competition.contracts during this period, $432 billion or 43 percent were awarded  noncompetitively; however, only about $12.5 billion—or about 3 percent— of DOD’s noncompetitive obligations were awarded under the urgency  exception. We note that our sample is not  representative of all dollars obligated for federal contracts. Such inaccurate reporting adds to existing  concerns about the reliability of some data elements in FPDS-NG which  GAO has reported on previously. Ensuring contracts  are correctly coded in FPDS-NG is critical as the data are used to inform  procurement policy decisions and facilitate congressional oversight. Agencies Cited a Range of Urgent Circumstances to Award Noncompetitive Contracts and Justifications Generally Contained Required Elements

After excluding the contracts we identified with data errors, we found that  34 contracts were awarded noncompetitively using the unusual and  compelling urgency exception to competition to meet a range of urgent   Our sample included DOD contracts that were awarded to  situations.meet urgent operational needs for combat operations in Afghanistan and  Iraq, including two contracts that highlight the risk of using the urgency  exception for research and development initiatives to immediately field  capabilities for combat operations. Justifications Generally Contained the Required Elements and Provided Varied Levels of Insight about the Risks that Led to Use of the Urgency Exception

Justifications in our sample generally contained the required information;  however, some fell short of the FAR requirements and did not obtain the  necessary signatures, among other things. The  remaining eight contracts were extended beyond 1 year through  subsequent modifications, which contracting officials considered separate  contract actions that, in their view, would not require a determination by  the head of the agency. In  addition, contracts may not exceed more than 1 year unless the head of  agency, or their designee, determines that exceptional circumstances  apply. Standards for Internal Control in the  Federal Government calls for organizations to maintain proper controls  that ensure transparency and accountability for stewardship of  government resources. Some Urgent Contracts Achieved Limited Competition, While Lack of Access to Technical Data Rights and Reliance on Contractor Expertise Thwarted Competition in Others

Even in urgent situations, agencies are required to seek offers from as  many potential sources as practicable given the circumstances and some  programs in our sample were able to use the prior expertise or market  knowledge to hold limited competitions. In light of this, having OFPP provide guidance to  clarify when determinations are needed when extending the period of  performance on an urgency contract could help achieve consistent  implementation of the duration requirement across the government. To help ensure consistent implementation of the FAR requirement to limit  the period of performance for noncompetitive contracts using the unusual  and compelling urgency exception, we recommend that the Director of the  Office of Management and Budget, through the Office of Federal  Procurement Policy, take the following action:
Provide guidance to clarify when determinations of exceptional  circumstances are needed when a noncompetitive contract awarded  on the basis of unusual and compelling urgency exceeds 1 year,  either at time of award or modified after contract award. Appendix I: Objectives, Scope, and Methodology

The objectives for this review were to examine (1) the pattern of use of  the unusual and compelling urgency exception, including the range of  goods and services acquired by the Departments of Defense (DOD) and   State, and US Agency for International Development’s (USAID); (2) the  reasons that agencies awarded noncompetitive contracts on the basis of  urgency and the extent to which justifications met requirements in the  Federal Acquisition Regulation (FAR); and (3) the extent to which  agencies limited the duration of the contract and achieved competition. We interviewed contracting and  acquisition policy officials, procurement attorneys, program officials, and  competition advocates at DOD, State, and USAID to discuss the facts  and circumstances regarding use of the urgency exception and agency  policies and procedures to implement FAR requirements for publicly  posting justifications   To determine the extent to which agencies complied with the FAR  requirement to limit the total period of performance of a contract awarded  using the urgency exception to no more than a year unless the head of  the agency makes a determination of exceptional circumstances, we  reviewed contract file documents for 34 selected contracts that we  identified were awarded using the urgency exception.
Why GAO Did This Study

Competition is a critical tool for achieving the best return on the government's investment. Federal agencies are generally required to award contracts competitively but are permitted to award noncompetitive contracts under certain circumstances, such as when requirements are of such an unusual and compelling urgency that the government would suffer serious financial or other injury. Contracts that use the urgency exception to competition must generally be no longer than one year in duration.
The conference report for the National Defense Authorization Act of Fiscal Year 2013 mandated GAO to examine DOD's, State's, and USAID's use of this exception. For the three agencies, GAO assessed (1) the pattern of use, (2) the reasons agencies awarded urgent noncompetitive contracts and the extent to which justifications met FAR requirements; and (3) the extent to which agencies limited the duration. GAO analyzed federal procurement data, interviewed contracting officials, and analyzed a non-generalizable sample of 62 contracts with a mix of obligation levels and types of goods and services procured across the three agencies.

What GAO Found

The Departments of Defense (DOD) and State and the U.S. Agency for International Development (USAID) used the urgency exception to a limited extent, but the reliability of some federal procurement data elements is questionable. For fiscal years 2010 through 2012, obligations reported under urgent noncompetitive contracts ranged from less than 1 percent to about 12 percent of all noncompetitive contract obligations. During that time, DOD obligated $12.5 billion noncompetitively to procure goods and services using the urgency exception, while State and USAID obligated $582 million and about $20 million respectively, almost exclusively to procure services. Among the items procured were personal armor, guard services and communications equipment to support missions in Afghanistan and Iraq. GAO found coding errors that raise concerns about the reliability of federal procurement data on the use of the urgency exception. Nearly half—28 of the 62 contracts in GAO's sample—were incorrectly coded as having used the urgency exception when they did not. GAO found that 20 of the 28 miscoded contracts were awarded using procedures that are more simple and separate from the requirements related to the use of the urgency exception. Ensuring reliability of procurement data is critical as these data are used to inform procurement policy decisions and facilitate oversight.
For the 34 contracts in GAO's sample that were properly coded as having used the urgency exception, agencies cited a range of urgent circumstances, primarily to meet urgent needs for combat operations or to avoid unanticipated gaps in program support. The justifications and approvals—which are required by the Federal Acquisition Regulation (FAR) to contain certain facts and rationale to justify use of the urgency exception to competition—generally contained the required elements; however, some were ambiguous about the specific risks to the government if the acquisition was delayed.
Ten of the 34 contracts in GAO's sample had a period of performance of more than one year—8 of which were modified after award to extend the period of performance beyond 1 year. The FAR limits contracts using the urgency exception to one year in duration unless the head of the agency or a designee determines that exceptional circumstances apply. Agencies did not make this determination for the 10 contracts. The FAR is not clear about what steps agencies should take when a contract is modified after award to extend the period of performance over 1 year. Some contracting officials noted that these modifications are treated as separate contract actions and would not require the determination by the head of the agency or designee. Others considered them cumulative actions requiring the determination. Standards for Internal Controls in the Federal Government calls for organizations to maintain proper controls that ensure transparency and accountability for stewardship of government resources. The Office of Federal Procurement Policy (OFPP)—which provides governmentwide policy on federal contracting procedures—is in a position to clarify when the determination of exceptional circumstances is needed to help achieve consistent implementation of this requirement across the federal government. Further, under the urgency exception, the FAR requires agencies to seek offers from as many vendors as practicable given the circumstances. For some contracts in GAO's sample, lack of access to technical data rights and reliance on contractor expertise prevented agencies from obtaining competition.

What GAO Recommends

GAO recommends that DOD, State and USAID provide guidance to improve data reliability and oversight for contracts awarded using the urgency exception. GAO also recommends that OFPP provide clarifying guidance to ensure consistent implementation of regulations. Agencies generally agreed with the recommendations.