Government and industry officials stated, however, that it will probably take well over a year after the December 1, 1995, implementation of FASA in governmentwide regulations for significant effects of these changes to be apparent. Regarding the use of the results of market research in the contracts reviewed, we found evidence that such research was used in 13 of the  21 contracts to obtain commercial items and NDI and in 5 of the  21 contracts to obtain government-unique items or services. For example, post-FASA efforts to implement the new market research requirements have included (1) the Defense Acquisition University’s development of a governmentwide satellite training program, for the acquisition workforce, that included modules on market research; (2) the Office of Federal Procurement Policy’s (OFPP) efforts to compile a list of available commercial training courses for market research; (3) the Federal Acquisition Institute’s revisions and development of online training materials relating to market research; (4) GSA’s compilation of commercial terms and conditions used by 100 of the top Fortune 500 companies; and (5) DOD’s issuance of its 1996 5000.1 and 5000.2 acquisition guidance, incorporating FASA’s market research changes. Although these officials acknowledged that the regulation writers may have intended for note 26 to be used as a final check on the government’s market research, some DOD and GSA officials objected to an across-the-board use of the note as such a check. Both the DOD and GSA officials stated that they would take actions to exempt these types of contracts from the note 26 requirement. Broad Consensus Against a Government- maintained Database, but Other Ideas Might Be Helpful

Government and industry officials have provided varied opinions on the possibility of creating a governmentwide database for storing, retrieving, and analyzing market data. They said such a database is feasible but would be difficult to maintain and would be costly. For example, OFPP officials and others pointed out that powerful “search engines” are becoming available on the Internet that will facilitate market research of private sector and government electronic catalogs. In light of these Internet initiatives and the strong consensus against the database, we do not believe that federal agencies should be required, at this time, to create a comprehensive, governmentwide, and government-maintained database to store, retrieve, and analyze market data. This does not include services that are sold based on hourly rates without an established catalog or market price for a specific service performed; (g) “Any item, combination of items, or service referred to in paragraphs (a) through (f), notwithstanding the fact that the item, combination of items, or service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor; or (h) “A nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments.” (a) “Any previously developed item of supply used exclusively for governmental purposes by a Federal agency, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement; (b) “Any item described in paragraph (a) of this definition that requires only minor modification or modifications of a type customarily available in the commercial market place in order to meet the requirements of the procuring department or agency; or (c) “Any item of supply being produced that does not meet the requirements of paragraph (a) or (b) solely because the item is not yet in use.”

Market Research Efforts and Results for the 21 Contracts Reviewed

Table II.1 shows the market research efforts in developing requirements and increasing competition.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the government's use of market research, focusing on: (1) existing federal government market research efforts, both before and after implementation of the Federal Acquisition Streamlining Act of 1994 (FASA), regarding commercial items and nondevelopmental items (NDI); and (2) the feasibility of creating a governmentwide database for storing, retrieving, and analyzing market data.

What GAO Found

GAO found that: (1) GAO's review of 21 selected contracts and discussions with the Department of Defense (DOD) and civilian agency officials showed that the government's market research efforts varied widely, but the variances appeared to be appropriate; (2) the type and extent of market research varied for the 21 contracts reviewed; (3) overall, the agencies: (a) obtained commercial items or NDI in 16 of the 21 contracts, although for 3 of the 16, market research was, for legitimate reasons, not performed; and (b) used market research to obtain government unique items or services in 5 of the 21 contracts; (4) at the time of GAO's review, implementation of FASA's market research requirements was underway, but government and industry officials said it would take well over a year after the December 1, 1995, implementation date before the impact of the changes could be realized; (5) for example, in GAO's review of Commerce Business Daily notices published from October 1995 to May 1996, GAO found that the final check on the government's market research, which the federal acquisition regulation (FAR) required, generally was not being used; (6) although officials at most of the activities GAO contacted said they were not aware of the requirement and would send out policy letters to increase compliance, the Director of Defense Procurement and the General Services Administration's Associate Administrator for Acquisition Policy took issue with an across-the-board application of the requirement, stating that they would take actions to amend the FAR to exempt certain contracts from this requirement; (7) there is strong opposition to creating a governmentwide, government-maintained database for storing, analyzing, and retrieving market data; (8) most government and industry officials said that: (a) such a database would be too costly to maintain, be hard to keep current, and provide few benefits; and (b) using the tools available on the Internet appears to be a more practical alternative; (9) for example, some officials stated that powerful search engines are becoming available on the Internet that will likely facilitate market research of private sector and government electronic catalogs; (10) in addition, interactive forums have been placed on the Internet, such as DOD's newly developed Commercial Advocates Forum, that provide useful market research tools and information; and (11) based on GAO's discussions with government and industry officials, and in light of new developments on the Internet, GAO does not believe that federal agencies should be required, at this time, to create a government-maintained database to store, retrieve, and analyze market data.