Not too much competition in too many places, says GAO

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Overall, the Defense Department finds it easier to have the private sector compete for services contracts than for product contracts, according to data from the Government Accountability Office.

In a report dated March 15, the GAO says that during the past fiscal year, the competition rate for contracts and task orders for services contracts (other than research and development services) was 78 percent. For R&D services, it was 59 percent.

For products, the rate of competition was less than half of contracts and services, the GAO says--just 41 percent.

A closer look at competition rates shows substantial variation by DoD component, however. Defense agencies had a competition rate close to 90 percent, while the Air Force had a rate of around 60 percent. The Army and the Navy were closer to the overall DoD average, the Army slightly above it and the Navy slightly below.

GAO auditors don't offer up a reason why services get more competition than products. Defense product spending has typically consumed between about 45 and 50 percent of total DoD contract spending during the past decade, according (.pdf) to the Center for Strategic and International Studies. Oversight attention, including the GAO's, has typically focused on non R&D services, which steadily climbed since the end of the Cold War as a proportion of total contract spending to its present past decade level of about 40 to 42 percent, according to CSIS numbers.

Then-acquisition czar Ashton Carter (now Defense under secretary) issued in November 2010 a memo directing contracting officers to increase competition by providing additional response time to solicitations for which only one offer is received if less than 30 days were initially provided to respond.

The majority of DoD's non-R&D services contracts awarded without competition were done with a justification that "only one responsible source" existed. The GAO has previously urged the DoD to acquire technical data allowing it to avoid such situations and be able to compete contracts for weapon systems sustainment. However, technical data can be an expensive up-front purchase, since many contractors are reluctant to part with it.

The GAO report notes one $455.3 million Army sole-source contract for helicopter remanufacturing made because the Army lacked technical data and expertise. The contractor in possession of the technical data valued it at $4 billion, according to the justification and approval filed for the contract.

For more:
- download the report, GAO-12-384 (.pdf)

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