Non-competitive award of contracts continues to be a bugaboo of federal contracting. Like weeds, it is resistant to attempts at hacking it back. A recent look at contracts from several departments, conducted by the Government Accountability Office, found that although the level fluctuates, about a third of contract obligations are attributed to non-competitive contracts. In an e-mail interview, FedInsider asked John Hutton, GAO’s Director of Acquisition and Sourcing Management, about why non-competitive contracting is so persistent. He said you can’t always blame the contracting officers.
FedInsider: Of all the discrete findings in 10-833, which do you think are the most significant?
Hutton: The following are the key highlights from the report:
From fiscal years 2005 to 2009, the percentage of obligations to noncompetitive contracts decreased from about 36 to 31 percent. However the overall spending increased so the actual dollars on noncompetitive contracts increased. Contracts with only one offer remained at about 13 percent of total obligations over time. The most commonly used reasons for not competing a contract we found was that only one source was available, or that the agency used small business preferences that allow for sole source contracts.
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 inhibit competition. Program offices also play a large role in the acquisition process and outcomes, in some cases pressing for contracts to be awarded to a specific contractor or not allowing enough time for robust acquisition planning.
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. With respect to these contracts, we recommended that the Office of Federal Procurement Policy consider amending the FAR to require agencies to review why only one source responded to the solicitation and steps that can be taken to increase competition should there be a follow on procurement.
Agencies are required to appoint competition advocates to identify opportunities for competition and barriers to competition. The agencies we reviewed 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. We think there is an opportunity here for OFPP to provide more guidance on how to make the role of the competition advocate more effective. We also recommended that OFPP direct agencies to require the competition advocates to actively involve program offices in highlighting opportunities for more competition. This is important because program offices are establishing requirements and, in some cases, prefer to retain the incumbent contractor with whom they are comfortable.
Fedinsider: You note a key reason given for non-competitive contracts is the “one vendor qualified” cause. If this is widespread, do you think it is because there is deliberate wiring of contracts, inadvertent wiring because of vendor influence in requirements development, or simply poor requirements-writing?
Hutton: There are numerous circumstances that may lead to a noncompetitive contract award using the exception to competition that there is only one responsible source. Federal regulations allow for a contract to be awarded using this exception because there are legitimate cases where only one vendor could meet the agency’s requirement. For example, at DOD, the lack of technical data packages can mean that only one contractor has the necessary information (and often the corresponding skills and expertise) to perform the work.
That said, in our report we note that opportunities do exist for increasing competition in federal contracting. Many of the large dollar contracts we reviewed that were not competitive came about as a result of decisions made during the acquisition planning phase that essentially locked the government into one contractor. Efforts designed to increase competition would need to consider better acquisition planning so that competition can be built into the future of procurements and programs. Several agency competition reports to OMB also noted the role program offices play in acquisition planning and pointed to pressure applied by program offices on the contracting process to award new contracts to a specific vendor without competition. We believe that greater program staff involvement and focus on competition, and working as a team with the contracting staff, can help ensure the best possible outcomes for the government.
FedInsider: How can the desirability of competed contracts square with the sole-source or non-competitive provisions in the many set-aside and preference programs? Do agencies conveniently overlook the competition requirements even in small business contracting?
Hutton: The federal government recognizes the importance of successful small businesses to the overall economy, and therefore acquisition regulations do provide certain small business with procurement advantages, such as allowing noncompetitive awards to 8(a) firms under certain thresholds. In fact, agencies are required to contract a certain percentage of their work to small businesses each year. At the same time however, agencies still need to ensure that the taxpayer is paying a fair and reasonable price and that all federal regulations are followed.
FedInsider: Why is competition so much of a burden for the government — is the contracting and acquisition workforce overtaxed? Seems like the justifications required for other than full-and-open comprise a workload in and of themselves.
Hutton: We have reported in the past on the challenges in skill set and size of the federal acquisition workforce and its impact on the acquisition environment. There is no question that this plays a role in many of the issues that we are reporting about, although some steps are being taken to address this situation in certain agencies. However, the acquisition workforce is responsible for protecting taxpayer money, and competition is one of the ways to obtain the best return on investment. While justifying and obtaining approval from higher-level officials for other than full and open competition can take time, these steps are important to ensure that competition is being sought where ever possible.
FedInsider: What do you recommend of OFPP? Doesn’t the Federal Acquisition Regulation need to retain the flexibility that is both its strength and Achilles heel?
Hutton: Our recommendation to OFPP that pertained to the FAR was to consider including a requirement to analyze and document situations where only one offer was received in response to a solicitation. OFPP had already begun efforts to draw attention to these procurements, as they included them in their definition of “high risk” contracts. We found there was little guidance or regulation about contracts that are competed but receive only one offer, and this represents another opportunity to improve the quality of competition achieved in federal procurements. While the FAR allows contracting officers to use their judgment in many areas, in this case we believed that additional guidance would be beneficial.
Overall, our recommendations to OFPP were to address high level opportunities to increase competition across the government. OFPP has taken some positive steps toward making agencies accountable by asking them to decrease their use of high risk contracts, which includes noncompetitive contracts, by 10 percent in fiscal 2010. By keeping attention on this issue and pressure on agencies to increase competition, OFPP can make a difference.
Ultimately the results have to come from the agencies making changes in the way they do business, but OFPP’s consistent attention and direction can help hold agencies accountable for results.
FedInsider: It seems like progress was made in 2009.
Hutton: Although the overall percentage of noncompetitive obligations went down in fiscal 2009, overall actual obligations increased (in total and in noncompetitive obligations). Because of the limitations of the scope of our review, we cannot comment on what was driving these trends.
FedInsider: Looking at the overall numbers, what is the reference point to compare whether the level of dollars spent under competition is reasonable or correct?
Hutton: FAR exceptions to competition recognize that in some cases it is not in the government’s best interest to compete every contract. We cannot say what the “right” level of competition is overall, but our work has shown that there are opportunities to increase competition, and that was the focus of our recommendations. We have issued other reports, such as on agencies’ use of blanket purchase agreements and Army contract security guards, where we pointed out opportunities for savings through increased competition.
FedInsider: Describe how the dynamics in the DOD side of the house differ from those in the civilian.
Hutton: Generally we found that whether it is a civilian or DOD agency, one challenge is for program office staff to exercise diligence about competition and to write requirements, when possible, so as not to overly restrict vendor responses. That said, in some ways DOD faces unique challenges in that a lot of the major weapons programs include highly specialized equipment or skill sets to accomplish the goals of the program that, at this time, only one contractor can provide. The Weapon Systems Acquisition Reform Act includes some steps that could influence the amount of competition in future programs or procurements, but the impact of this is dependent on individual decisions made by DOD.
Your report is a very comprehensive outline of a very challenging issue. It becomes challenging upfront because there are no easy answers. However there are analytical tools that can be used to evaluate contract awards in the wake of transparency, and in light of our current economy and public policies seeking to drive federal dollars to small business. (or firms who may be eligible for set a sides or sole source), I believe we should ensure that this discussion continues to a resolve. Let’s together look at the latest contract awards as of this afternoon September 20, 2010.
Review the size of the awards. The number of small business contract awards, and how the analysis provided may leave room for further and deeper evaluation and considerations.
DEFENSE LOGISTICS AGENCY
Washington Gas Energy Services, Herndon, Va., is being awarded a maximum $105,454,390 fixed-price with economic price adjustment contract for natural gas. Other locations of performance are Maryland, Virginia, Delaware and the District of Columbia. Using services are Army, Navy, Air Force and federal civilian agencies. The original proposal was Web-solicited with 29 responses. The date of performance completion is Sept. 30, 2012. The Defense Logistics Agency Energy, Fort Belvoir, Va., is the contracting activity (SPO600-10-D-7514).
Colonial Energy, Inc., Fairfax, Va., is being awarded a maximum $48,844,533 fixed-price with economic price adjustment contract for natural gas. Other locations of performance are Connecticut, New Jersey, New York, North Carolina, and Pennsylvania. Using services are Army, Navy, Air Force and federal civilian agencies. The original proposal was Web-solicited with 29 responses. The date of performance completion is Sept. 30, 2012. The Defense Logistics Agency Energy, Fort Belvoir, Va., is the contracting activity (SPO600-10-D-7512).
Afga Healthcare, Ridgefield Park, N.J., is being awarded a maximum $45,000,000 fixed-price with economic price adjustment bridge contract for DIN-PACS systems, sub-systems and components. Using services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. The original proposal was Web-solicited with eight responses. The date of performance completion is May 21, 2011. The Defense Logistics Agency Troop Support, Philadelphia, Pa., is the contracting activity (SPM200-04-D-8303).
Atmos Energy Marketing, LLC, Houston, Texas, is being awarded a maximum $39,631,685 fixed-price with economic price adjustment contract for natural gas. Other locations of performance are Georgia, Kansas, Kentucky, Tennessee and Virginia. Using services are Army, Navy, Air Force and federal civilian agencies. The original proposal was Web-solicited with 29 responses. The date of performance completion is Sept. 30, 2012. The Defense Logistics Agency Energy, Fort Belvoir, Va., is the contracting activity (SPO600-10-D-7506).
Fuji Medical Systems USA, Stamford, Conn., is being awarded a maximum $9,000,000 fixed-price with economic price adjustment bridge contract for DIN-PACS systems, sub-systems and components. Using services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. The original proposal was Web-solicited with eight responses. The date of performance completion is May 21, 2011. The Defense Logistics Agency Troop Support, Philadelphia, Pa., is the contracting activity (SPM200-04-D-8307).
GSD&M Idea City, LLC, Austin, Texas, was awarded an estimated $41,000,000 contract modification which will provide non-personal advertising necessary including the management, supervision, personnel labor, material and equipment required to plan, create, design, produce, place, evaluate and measure the effectiveness of advertising and special events in support of Air Force active duty national, regional and local recruiting marketing support. At this time, zero dollars have been obligated. AETC Contracting Squadron, Randolph Air Force Base, Texas, is the contracting agency (FA3002-08-D-0019; P00004).
Booz Allen Hamilton, Inc., Herndon, Va., was awarded a $24,999,153 contract which will provide survivability/vulnerability technical analysis for homeland infrastructure foundation-level data and geospatial analysis for homeland defense/homeland security missions. At this time, $2,227,942 has been obligated. 55 CONS/LGCD, Offutt Air Force Base, Neb., is the contracting activity (SP0700-03-D-1380; Delivery Order 387).
Battelle Memorial Institute, Columbus, Ohio, was awarded an estimated $22,731,398 contract modification to conduct studies and analyses to determine the efficiency of contamination mitigation technologies against advanced threats including the by-products formed from reactions of the advanced threats with contamination mitigation technologies. At this time, $700,000 has been obligated. 55 CONS/LGCD, Offutt Air Force Base, Neb., is the contracting activity (SP0700-00-D-3180; Delivery Order 0665).
AP Mountain, LLC, Aurora, Colo., was awarded a $20,536,000 contract for renovation phases five and sixfor Vandenberg Hall at the U.S. Air Force Academy. At this time, $20,536,000 has been obligated. Tenth Contracting Squadron, U.S. Air Force Academy, Colo., is the contracting activity (FA7000-10-C-0029).
The Ross Group, Oklahoma City, Okla. (FA8101-10-D-0002); Diversified Construction, Edmond, Okla. (FA8101-10-D-0003); Southwind Construction, Edmond, Okla. (FA8101-10-D-0004); Warden Construction, Jacksonville, Fla. (FA8101-10-D-0005); The Asset Group, Oklahoma City, Okla. (FA8101-10-D-0006); HGL Construction, Midwest City, Okla. (FA8101-10-D-0007) were awarded competitive $20,000,000 small business set-side multiple award construction contracts. The contracts will provide diversified construction services for a one-year basic period with four one-year options, a total of five years. Each construction project will be awarded by an individual delivery order issued against the basic contract. At this time, $3,460,573 has been obligated. OC-ALC/PKOBA, Tinker Air Force Base, Okla., is the contracting activity.
Booz Allen Hamilton, Inc., Herndon, Va., was awarded a $13,888,766 contract which will provide mission assurance and protection survivability/vulnerability operations analysis and risk assessment in support of U.S. Northern Command. At this time, $548,668 has been obligated. 55 CONS/LGCD, Offutt Air Force Base, Neb., is the contracting activity (SP0700-03-D-1380; Delivery Order 392).
Jacobs Technology, Inc., Tullahoma, Tenn., was awarded a $9,573,608 contract modification which will provide six months of contractor support for the design, construction, reconfiguration, modification, test operations and maintenance of experimental and support facilities used to perform research and development of rocket propulsion, space systems and their components under the research operations support services contract. At this time, $2,182,595 has been obligated. Air Force Research Laboratory, Edwards Air Force Base, Calif., is the contracting activity (F04611-99-C-003-P00143).
ATAP, Inc., Eastaboga, Ala., was awarded an estimated $9,218,236 contract for the repair and overhaul of AS32R refueler vehicles. Best estimated quantity for the basic year is 84 refuelers. For Option I, the best estimated quantity is 58 vehicles; 57 for Option II-IV; and 52 for Options V-IX. At this time, no money has been obligated. WR-ALC/GRVKBA, Robins Air Force Base, Ga., is the contracting activity (FA8519-10-D-0004).
Booz Allen Hamilton, Inc., Herndon, Va., was awarded a $6,912,189 contract which will provide technical analysis and strategic planning for research, development and engineering command. At this time, $56,717 has been obligated. 55 CONS/LGCD, Offutt Air Force Base, Neb., is the contracting activity (SP0700-03-D-1380; Delivery Order 393).
Bell Boeing Joint Project Office, Amarillo, Texas, is being awarded a $22,362,630 cost-plus-fixed-fee delivery order against a previously issued basic ordering agreement (N68335-08-G-0002) for design, development, test, manufacture, and delivery of Lot IV Operational Test Program Sets (OTPSs), including production copies of the OTPSs for MV-22 and CV-22, on-site verification (OSV), and the procurement of General Electric Interface Unit Weapons Replaceable Assemblies (WRAs) and standby flight instrument/enhanced standby flight instrument WRAs. This order includes those for the Air Force (16 production units and OSV of two units) and the Marine Corps (non-recurring design engineering, 12 pilot production units, 72 production units, and OSV of 12 units). Work will be performed in St. Louis, Mo. (89.6 percent), and Ridley Park, Pa. (10.4 percent). Work is expected to be completed in August 2015. Contract funds in the amount of $13,480,298 will expire at the end of the current fiscal year. This order combines purchases for the Air Force ($1,044,826; 4 percent) and the Marine Corps ($22,317,804; 96 percent). The Naval Air Warfare Center Aircraft Division, Lakehurst, N.J., is the contracting activity.
Terex Government Programs, dba Terex Corp., Fredericksburg, Va., is being awarded an $18,896,371 firm-fixed-price, indefinite-delivery/indefinite-quantity contract to purchase up to 200 light capability rough terrain forklifts. Delivery Order #0001 will be executed in the amount of $9,875,808. Work will be performed in Fredericksburg, Va., and is expected to be completed by September 2012. Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured. The Marine Corps Systems Command, Quantico, Va., is the contracting activity (M67854-10-D-5074).
The MIL Corp., Bowie, Md., is being awarded an $8,395,848 modification to a previously awarded cost-plus-fixed-fee contract (N00421-09-C-0096) to exercise an option for engineering support for the development, integration, and procurement of mission systems integration on airborne and shipboard platforms. This effort will support the Mission Systems Engineering Branch of the Naval Air Warfare Center Aircraft Division. The estimated level of effort for this option is 107,000 man-hours. Work will be performed in St. Inigoes, Md., and is expected to be completed in September 2011. Contract funds will not expire at the end of the current fiscal year. The Naval Air Warfare Center Aircraft Division, Patuxent River, Md., is the contracting activity.
The Hawaiian Rock Products Corp., Mangilao, Guam, is being awarded $7,305,846 for firm-fixed-price task order #JQ41 under a previously awarded indefinite-delivery/indefinite-quantity contract (FA5240-09-D-0001) for repairs to Taxiway C between Taxiway H and G Road at Andersen Air Force Base Guam. The work to be performed provides for cold milling and removal of existing asphalt concrete pavement to a depth of approximately five inches at Taxiway C, two inches at the taxiway shoulders, and five inches for the section of hardstand aprons down to existing base course. Spread, grade, and compact to one to two inches leveling course. Work will be performed in Yigo, Guam, and is expected to be completed by February 2011. Contract funds will expire at the end of the current fiscal year. One proposal was received for this task order. The Naval Facilities Engineering Command, Marianas, Guam, is the contracting activity.
Metro Machine Corp., Norfolk, Va., is being awarded a $7,218,748 modification to previously awarded contract (N00024-10-C-4306) for USS Carr (FFG 52) maintenance and repair during fiscal 2010 drydocking selected restricted availability. Work will be performed in Norfolk, Va., and is expected to be completed by December 2010. Contract funds will expire at the end of the current fiscal year. The Norfolk Ship Support Activity, Norfolk, Va., is the contracting activity.
Soltek Pacific Construction Co., San Diego, Calif., is being awarded $6,402,000 for firm-fixed-price task order #0014 under a previously awarded multiple award construction contract (N62473-08-D-8615) for construction of a C-5 Squadron Aircraft Operations and Maintenance Facility at Travis Air Force Base. The task order also contains one planned modification which if issued, would increase the cumulative task order value to $7,449,958. Work will be performed in Fairfield, Calif., and is expected to be completed by October 2011. Contract funds will not expire at the end of the current fiscal year. Four proposals were received for this task order. The Naval Facilities Engineering Command, Southwest, San Diego, Calif., is the contracting activity.
Force Protection Industries, Inc., Ladson, S.C., is being awarded a $5,532,028 firm-fixed-price modification under previously awarded contract (M67854-07-D-5031) for a three-month extension of 70 field service representatives to complete independent suspension system kit installation on the Cougar Mine Resistant Ambush Protected vehicle fleet. All work will be performed in Kuwait. Work is expected to be completed by Dec. 31, 2010. Contract funds in the amount of $5,532,028 will expire at the end of the current fiscal year. Marine Corps Systems Command, Quantico, Va., is the contracting activity.
Systems Products & Solutions, Inc., Huntsville, Ala., was awarded on Sept. 15 a $19,743,495 firm-fixed-price contract for training mechanics for the Iraqi Interior Ministry to train mechanics to repair HMMWV, air conditioning, hydraulics, power generation repair with an estimated completion date of Sept. 15, 2012. Work is to be performed at Baghdad, Iraq. Bids were solicited via the Web, with three received. Army Contracting Command, Rock Island, Ill., is the contracting activity (W5P1J-10-F-0028; Serial #1948).
Rolls Royce Corp., Indianapolis, Ind., was awarded on Sept. 15 a $19,187,689 firm-fixed-price contract for 40 gas turbine engines M250/C30R/3 for the OH-58D Kiowa safety enhancement program with an estimated completion date of Dec. 31, 2012. Work is to be performed at Indianapolis, Ind. One bid was solicited with one received. Army Contracting Command, Redstone Arsenal, Ala., is the contracting activity (W58RGZ-09-D-0190; Serial #1945).
Mythics, Inc., Virginia Beach, Va., was awarded on Sept. 15 a $9,883,241 firm-fixed-price contract for a first responder network. With an estimated completion date of May 20, 2011. Work is to be performed in the cities of Erbil, Dahuk, and Sulaymaniyah in Iraq. This was a brand-name selection with one bid received. CENTCOM Contracting Command is the contracting activity (W91GY0-10-C-0022; Serial #1923).
Harvest Professional Services, Co., Inc., Henderson, Texas, was awarded on Sept. 15 a $7,894,714 firm-fixed-price contract for family readiness services support for the California Army National Guard with an estimated completion date of Sept. 30, 2015. Work is to be performed at the following California sites: San Luis Obispo, Sacramento, Azusa, Santa Rosa, Chico, Walnut Creek, San Jose, Fresno, Modesto, Visalia, Camp Roberts, Bakersfield, Ventura, Los Alamitos, Bell, San Bernardino, Escondido, and San Diego. Bids were solicited via the Web with five received. NGB, USPFO, Calif., is the contracting activity (W912LA-10-C-0008; Serial# 1949).
OGTV (http://www.opengovtv.com) is an advocate for small business and we seek to engage large businesses to educate small businesses and to build collaborations to empower both the public and private sector to encourage more participation in the government process.
We welcome an collaborative efforts to assist.
After reading the GAO report, one thing that is clear to me is the artificial walls that are created between the program offices and contracting shops. The recommendations need to further stress the need for these offices to work together and collaborate better on requirements formation and market research to help alleviate the competition issues the report outlined. Program Managers that I work with know very little about contracting mechanisms, competition, and market research. Contracting officials tend to know little about the programs and requirements of their customers. It is reasons like this that I am a strong proponent of restructuring the acquisition workforce to have the skills sets of contracting, requirement development, and program management. These are the effective skills of program success, not just an 1102 anymore. Rethinking the way we do business, and the resources and skills necessary to accomplish these goals, is what comprehensive reform would look like.