Infotech and the Law

Contracting Officers May Be Thwarting Competition

Jonathan Cain

By Jonathan Cain

Has streamlining government information technology procurement resulted in better competition?

A new government report suggests that, despite changes in procurement rules aimed at ensuring full competition for IT contracts, contracting officers have become less diligent in promoting adequate competition.

The General Accounting Office, in a March report examining large multiple-award IT contracts, said competition has taken a back seat to administrative ease in the award of task-and-deliver orders under the contracts.

The GAO in late 1999 examined orders for IT goods and services of $5 million or more issued to the departments of Defense and Transportation, the General Services Administration and the National Institutes of Health. The congressional watchdog agency found that most orders were awarded without the benefit of any competing proposal having been received. In more than 75 percent of the cases, the incumbent was the only offerer.

This finding should come as no surprise. Seven years ago, a Pentagon panel that studied the use of multiple-award task order contracts predicted that agencies would issue orders for IT goods and services under these contracts because it was less administratively burdensome than holding competitions for individual contracts. The panel also cautioned that because of the the broad scope of the task order, IT contracts held a potential for abuse because they would be used as vehicles to award orders beyond the scope of work designated in the competition.

The Federal Acquisition Streamlining Act, or FASA, attempted to ensure competition by establishing a preference for multiple awards of task-and-delivery order contracts, and by requiring that all awardees be given a fair opportunity to compete for each order. The competition requirement is subject to several statutory exceptions: urgent need of the ordering agency, a unique requirement capable of being filled by only one contractor, economy of a sole-source, follow-on award to an incumbent or to attain a minimum guaranteed contract amount.

One problem, according to the GAO, is that contracting officers have taken excessive advantage of these statutory exemptions to avoid the fair opportunity for competition requirement and to ease the burden of administering reviews of competitive task-and-delivery order offers. This practice has denied the government the chance to realize all the benefits it was supposed to achieve through greater competition for IT products and services.

GAO found that relying on exemptions to the fair opportunity requirement resulted in both a large number of sole-source orders and an unusually high number of awards to incumbents in programs where multiple awards indicated there should be two or more competitors.

It also was apparent in some cases that orders were written in such a way that the incumbent was the only practical choice. For example, one agency required that the contractor provide 40 people, all with security clearances and fully trained, within days of the award. It was not surprising that the incumbent was the only bidder.

In several other cases, the contracting officer allowed contractors a few days to prepare a response to a task order, without any opportunity to obtain further information about the government's requirements. GAO also found several sole-source, follow-on orders were substantially broader in scope than the original order for which the agency had provided competition. This practice takes off the table new areas of business, which could be awarded to a different contractor under more competitive terms.

GAO also found that, in too many instances, contracting officers are ignoring FASA's emphasis on fixed-price, rather than cost-reimbursement, contracts and its requirement that task orders specifically define the work to be performed. Both practices breach part of the implicit bargain that FASA sought to implement.

Contracting officers claim using multiple-award procedures is quicker, simpler and involves less administrative expense. They contend that, by using these procedures, they are able to obtain IT products and services more quickly, thus the products and services are less likely to be obsolete by the time they are put into use.

It is undisputed that it is easier and faster to award sole-source orders than to conduct a competition. What Congress needs to address is whether FASA's implementation has met the expectations Congress had when it gave the agencies the flexibility they sought.

Jonathan Cain is an attorney specializing in intellectual property and litigation for information technology companies at Mintz Levin Cohn Ferris Glovsky & Popeo PC in Reston, Va. He can be reached at jcain@mintz.com

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