DOD Contracting

The Defense Department's (DOD) centralized contracting data do not identify contracts that have been bundled. Bundling occurs when agencies package contract requirements into acquisitions, a practice that can effectively preclude small businesses from competing. The Small Business Administration (SBA) has begun to collect data on the extent of contract bundling where it has assigned resident representatives, but only about half of DOD's contract dollars are obligated at these locations. SBA's data-gathering effort could yield empirical data on the magnitude of the problem. Should such data be deemed insufficient, however, GAO believes that there should be reasonable assurances that any new collection effort will accomplish its objectives without the cost exceeding the expected benefits. DOD officials and others believe that bundling could harm small businesses that want to compete for government contracts but could also benefit government procurement activities by reducing their workload. GAO found no empirical evidence proving the costs or benefits of bundling. Existing guidance in the Federal Acquisition Regulation does not ensure that contracting officers properly identify all bundled contracts. Further, the existence of multiple definitions creates confusion about what constitutes bundling.

GAO found that: (1) sufficient data are not available to determine the extent and impact of DOD contract bundling; (2) DOD officials believe that bundling could have a negative effect on small businesses that want to compete for government contracts and a positive effect on government procurement activities by reducing their workload; (3) the concept of contract bundling is sometimes at odds with the government's socioeconomic policies because of the potential adverse effect on small business participation in federal contract awards; (4) the Small Business Act does not establish monitoring and management controls to ensure that contracting officers properly identify all bundled contracts; and (5) the existence of multiple definitions of contract bundling creates confusion about what constitutes bundling.