Acquisition Reform

Concerned that federal agencies were avoiding competitive requirements when ordering under task- or delivery-order contracts, Congress passed the Federal Acquisition Streamlining Act. The act directs agencies to consider awarding multiple contracts, rather than a single contract, when a task- or delivery-order contract format was planned. This report discusses (1) whether federal agencies provided a fair opportunity for contractors to receive orders under multiple-award contracts, (2) how service fees assessed on interagency orders compared with agencies' costs to process such orders, and (3) if multiple-award contracts affected federal contracting opportunities for small businesses. GAO examines multiple-award contracts administered by six organizations--the Defense Information Systems Agency, the Department of Transportation, the General Services Administration, the National Institutes of Health, and the U.S. Air Force Electronic Systems Center's Hanscom Air Force Base operations and its Standard Systems Group.

GAO noted that: (1) efforts to provide a fair opportunity and therefore promote competition for orders placed under multiple-award contracts varied among the six organizations GAO reviewed; (2) one organization issued 64 percent of orders (accounting for 20 percent of dollars awarded) on a sole-source basis through the end of fiscal year 1997; (3) another organization named preferred contractors in announcements of opportunities; (4) this practice resulted in only one proposal being received on most orders; (5) after GAO disclosed these practices in a March 1998 hearing before the Senate Armed Services Subcommittee on Acquisition and Technology, the Office of Management and Budget (OMB) requested federal agencies to eliminate the practice of naming preferred contractors in announcements of opportunities for orders; (6) OMB also recommended that federal procurement regulations be revised to prohibit the practice; (7) all but one of the organizations GAO reviewed allowed other agencies to place orders on their multiple-award contracts; (8) the organizations charged varying service fees intended to recover the costs of awarding and administering the orders; (9) according to analyses performed by two organizations, fees exceeded costs in one case and did not recover costs in another; (10) however, management information was insufficient for the other three organizations to compare fees and costs; (11) one organization, for example, charged fees that ranged from $125 for administering an order placed by a component of its agency to as much as $99,000 for an order placed by another agency; (12) while the organization's management system for its multiple-award contract did not develop analyses to justify this disparity, officials are working to improve management systems; (13) GAO's analysis of aggregate governmentwide contracting data did not measure the specific impact of multiple-award contracting on small business opportunities but shows that the small business share of federal contracts has increased since FASA; (14) however, awards to small businesses at three contracting activities GAO visited have declined; and (15) the organizations GAO reviewed are taking steps to ensure that small businesses are not excluded from receiving orders placed under their multiple-award contracts.