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United States General Accounting Office: 
GAO: 

Report to Congressional Committees: 

March 2002: 

Metropolitan Washington Airports Authority: 

Contracting Practices Do Not Always Comply with Airport Lease 
Requirements: 

GAO-02-36: 

Contents: 

Letter: 

Results in Brief: 

Background: 

MWAA Has Not Satisfied Its Obligation to Publish the Procedures It 
Uses to Award Contracts Competitively: 

MWAA Has Not Always Satisfied Its Obligation to Obtain, to the Maximum 
Extent Practicable, Full and Open Competition: 

MWAA Believes That the Principles of Full and Open Competition Need to 
Be Defined within the Context of Airport Contracting: 

The Department of Transportation Represents the Interests of the 
United States in Its Dealings with MWAA: 

Conclusions: 

Recommendations for Executive Action: 

Matter for Congressional Consideration: 

Authority Comments and Our Evaluation: 

Appendix I: Principles of Full and Open Competition: Background: 
Fundamental Principles for Competitive Public Procurements: 
Applicability of Principles to Existing Contracts: 

Appendix II: Scope and Methodology: 

Appendix III: Contract Selection Methodology: 

Appendix IV: Comments from the Metropolitan Washington Airports 
Authority: 

GAO’s Comments: 

Table: 

Table 1: Contract Findings: Compliance with Selected Principles of 
Full and Open Competition: 

Abbreviations: 

ABA: American Bar Association: 

MWAA: Metropolitan Washington Airports Authority: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

March 1, 2002: 

The Honorable Ernest F. Hollings: 
Chairman: 
The Honorable John McCain: 
Ranking Minority Member: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

The Honorable Don Young: 
Chairman: 
The Honorable James L. Oberstar: 
Ranking Democratic Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Metropolitan Washington Airports Act of 1986 provided for the 
lease of Washington Dulles International Airport (Dulles) and Ronald 
Reagan Washington National Airport (Reagan National) and the transfer 
of operating responsibility from the federal government to the 
Metropolitan Washington Airports Authority. The Authority is an 
independent, nonfederal, public entity that has operated the 
government-owned airports since June 7, 1987, under a 50-year lease 
with the U.S. Department of Transportation.[Footnote 1] The transfer 
of operating responsibility was intended to facilitate timely 
improvements at the airports to meet the growing demand for air 
transportation. 

Under the statutory terms of its lease, the Authority must protect, 
promote, operate, and maintain Dulles and Reagan National airports in 
Virginia. To carry out this mandate, the Authority enters into a wide 
range of contractual relationships to acquire supplies and 
construction and other services. Acquisitions range from office 
supplies to heavy mobile equipment, from fuel oil and gasoline to 
replacement parts for air-conditioning systems, and from minor repairs 
to major construction. The Authority also contracts for a variety of 
revenue-generating concessions to provide, among other things, rental 
cars, food and beverages, customer service, parking, taxi services, 
advertising, and general aviation services needed by the airports’ 
users. 

The Authority’s lease with the federal government was intended to 
protect the federal government’s interest in the two airports. Thus, 
the 1986 act required that the Authority’s lease with the federal 
government incorporate several terms. One such term involves 
contracting at the airports. Specifically, the Authority’s lease with 
the federal government (the statutory lease provision) states the 
following: 

“...in acquiring by contract supplies or services for an amount 
estimated to be in excess of $200,000, or awarding concession 
contracts, the Authority shall obtain, to the maximum extent 
practicable, full and open competition through the use of published 
competitive procedures. By a vote of seven members [of its board of 
directors], the Authority may grant exceptions to the requirements of 
this paragraph.” 

In authorizing the airports’ lease, Congress generally intended the 
airports to be operated as a business and in a manner similar to other 
airports. Congress provided the Authority with considerable discretion 
in structuring its procurement process. Although the Authority is not 
required to follow federal procurement statutes and regulations, 
Congress obligated the Authority to implement, through the use of 
published competitive procedures, procurement and concession 
franchising systems designed to achieve full and open competition. 
Furthermore, the congressional mandate required the Authority to 
conduct its procurements, to the maximum extent practicable, in a 
manner consistent with the well-established principles underlying full 
and open competition. These principles are intended to ensure that all 
firms that wish to furnish supplies or services have an equal 
opportunity to compete for the award. Appendix I provides additional 
information about the fundamental principles underlying full and open 
competition. 

The 1986 act, as amended, requires us to periodically review the 
Authority’s contracting practices. Our first review was conducted in 
1992 and concluded that the Authority’s contracting practices 
generally promoted a competitive environment. However, we identified 
some practices that, if not corrected, could adversely affect the 
Authority’s competitive process.[Footnote 2] This report provides our 
current assessment of whether the Authority has satisfied its 
contracting obligations under the statutory lease provision. 
Specifically, this report addresses whether the Authority (1) has 
published the competitive procedures that it uses to award contracts 
and (2) for the contracts that we reviewed, has obtained, to the 
maximum extent practicable, full and open competition in contracting 
for goods and services whose estimated cost exceeded $200,000 or, if 
not, whether the Authority’s board of directors approved the 
exceptions. This report also addresses the Authority’s views about the 
meaning of full and open competition within the context of airport 
contracting. Finally, because the secretary of transportation 
represents the interests of the executive branch, this report 
addresses the Department of Transportation’s role in ensuring that the 
Authority fulfills its obligations under the lease. 

We focused primarily on two distinct groups of contracts that either 
exceeded $200,000 on the date of award or had exceeded $200,000 as of 
December 31, 1999. In total, 646 contracts met these criteria. The 
first group of contracts that we chose from this universe consisted of 
13 contracts that, according to the Authority’s contracting database, 
generally (1) were awarded between 1992 and 1999 using full and open 
competition and (2) exhibited the highest cost growth.[Footnote 3] We 
selected these 13 contracts to represent a full range of the 
Authority’s contracting activities, including the type and value of 
the Authority’s contracts. We reviewed the initial contract awards and 
all 240 subsequent modifications to the 13 contracts. The 
modifications changed the terms of the original contracts by, among 
other things, adding work to the contracts. The second group of 
contracts consisted of all 22 contracts that, according to the 
Authority’s database, were awarded without full and open competition 
in 1998 and 1999. In total, the 35 contracts that we examined were 
valued at about $408 million and accounted for 5 percent of the 646 
contract awards and 19 percent of the value of the 646 contracts as of 
December 31, 1999. Because the Authority does not have a centralized 
database of its concession contracts or documented procedures for 
awarding these contracts, we did not review concession contracts. 
Instead, we focused our review on the Authority’s contracts for 
supplies and services, including construction. 

We used the Authority’s written policies and procedures as well as the 
fundamental principles underlying full and open competition to 
evaluate the Authority’s contracting actions. Because the Authority is 
not required to follow federal procurement statutes and regulations, 
as detailed in appendix I, we applied generally recognized principles 
underlying the concept of full and open competition. The results of 
our contract analyses are not projectable to the universe of the 
Authority’s contracts for supplies and services.[Footnote 4] 
Appendixes II and III provide additional information about our scope 
and methodology, including our methodology for selecting contracts. 

We discussed our preliminary findings with officials from the 
Authority, and, by letters dated June 29, 2001, and July 9, 2001, the 
Authority provided additional information for us to consider in 
drafting our report. We incorporated this information as appropriate 
and, thereafter, provided a draft of this report for review and 
comment to the Authority and to the Department of Transportation. The 
parties’ responses, including the Authority’s letter dated January 4, 
2002, are summarized in the following section and discussed in more 
detail at the end of this letter. 

Results in Brief: 

Although the Authority issued guidance for awarding its contracts and 
concession franchises in 1993, the guidance does not adequately 
reflect competitive contracting principles and is out of date in 
numerous respects. Furthermore, the Authority does not use the 1993 
guidance to award its contracts for non-concession-related goods and 
services. As a result, the Authority has not satisfied its obligation 
under the lease. In our view, the clear intent of the statutory lease 
provision is to ensure that the Authority develops, publishes, and 
follows an orderly set of contracting procedures for awarding its 
contracts and concession franchises. Such procedures are intended to 
enhance competition and, when published, provide the means for 
contractors to understand the Authority’s contracting processes. 
Likewise, the requirement to publish the Authority’s contracting 
procedures is intended to assure prospective contractors that the 
procedures will actually be followed. The Authority’s 1993 guidance 
does not satisfy the intent of the statutory lease provision. For 
example, the contracting processes specified in the manual are written 
in such general terms that they provide little useful guidance to 
prospective contractors in understanding the Authority’s contracting 
procedures. Moreover, the 1993 manual is outdated and is not written 
so as to be binding on the Authority’s contracting activities. In 
fact, the 1993 manual is not the guidance actually used to award the 
Authority’s contracts. Instead, for contracts involving non-concession-
related goods and services, the Authority uses an internal manual it 
developed in 1998. The 1998 guidance is far more detailed, 
substantive, and prescriptive than the 1993 guidance but has not been 
published for use by prospective contractors. 

The Authority also did not satisfy its obligation to obtain, to the 
maximum extent practicable, full and open competition for 15 of the 35 
contracts that we reviewed, as follows: 

* Twelve of the 13 contracts that the Authority identified as awarded 
using full and open competition and that generally had the highest 
cost growth did not comply with one or more of the fundamental 
principles underlying full and open competition. Four of the 13 
contracts had problems pertaining to the Authority’s evaluation of 
proposals, including errors in the Authority’s scoring of contractor 
proposals, and 2 others involved the use of a potentially problematic 
evaluation methodology. Moreover, in 8 of the 13 contracts, the 
Authority did not solicit competition for all of its procurement 
needs, including $11.4 million in contract term extensions, which 
could have been subject to competition. Finally, the Authority 
modified 3 of the 13 contracts to obtain goods and services that were 
beyond the scope of work contained in the original solicitations. For 
example, the Authority modified 1 contract on at least 10 occasions to 
add about $2.1 million in work that it had originally planned to 
compete separately. According to the Authority, it changed its plan 
because of the contractor’s success on another airport project and the 
Authority’s desire to perform the work more quickly than could be 
accomplished otherwise. Since the Authority specifically excluded the 
additional work from the scope of the original contract, this work was 
not subject to competition. Thus, obtaining the work through contract 
modifications was tantamount to a series of sole-source procurements. 
The Authority disagrees that these and other actions represent sole-
source procurements and, as a result, did not prepare sole-source 
justifications-—as required by its internal contracting procedures-—or 
obtain exceptions to the use of full and open competition from its 
board of directors, as required by its lease with the federal 
government. 

* The use of less than full and open competition for 19 of the 
remaining 22 additional contracts that we reviewed appeared acceptable 
given the contracts’ circumstances. However, we believe that the 
Authority missed opportunities to fully compete 3 of the 22 contracts. 
The 3 contracts were awarded to United Airlines on a sole-source basis 
for the design and construction of office space for federal agencies 
that process international travelers, 12 passenger-screening 
checkpoints, and an outbound baggage-handling system. The improvements 
totaled about $10.6 million. The Authority did not prepare sole-source 
justifications or seek exceptions to the use of full and open 
competition from its board of directors because it concluded—-
erroneously, in our view—-that the work was authorized under the 
parties’ agreement for the airline’s use and lease of airport 
facilities and therefore, in the Authority’s view, was not subject to 
the requirement for full and open competition. In addition to the 3 
airline sole-source awards, 2 of the 22 contracts that we reviewed 
were not approved by the Authority’s board, as required for sole-
source awards. The Authority agreed that the necessary board approvals 
were not obtained for these 2 procurements and indicated that the 
requirement had been overlooked. 

As previously noted, the results of our contract analyses are not 
projectable to the universe of the Authority’s contracts for supplies 
and services. However, because the Authority permits several of the 
contracting practices that we questioned as a matter of policy or 
practice, we believe that similar problems are likely to exist in the 
Authority’s other contracts. 

While not conceding that the examples cited in this report represent a 
violation of “any law or its federal lease,” the Authority 
acknowledged, in its June 29, 2001, letter to us, that it needed to 
better embrace and articulate “certain hallmarks of ‘full and open’ 
competition.” The Authority stated, however, that our assessment of 
its contracting practices using recognized principles of full and open 
competition was inappropriate in part because, in its view, these 
principles do not adequately reflect the unique environment applicable 
to contracting at commercial airports. We disagree with the Authority’
s view. The Authority is not a private entity with authority to 
operate freely in the commercial world. Rather, the Authority is a 
public entity subject to contracting requirements that call for the 
use of full and open competition, to the maximum extent practicable, 
that were set forth in its lease with the federal government. 

As signatory to the lease, the secretary of transportation is the 
primary executive branch official responsible for representing the 
interests of the United States in its dealings with the Authority. The 
1986 act that transferred responsibility for operating the airports, 
however, does not define the specific role of the Department of 
Transportation in overseeing the Authority’s compliance with the 
contracting requirements imposed in its lease with the federal 
government. 

The Authority’s failure to obtain, to the maximum extent practicable, 
full and open competition for 15 of the 35 contracts that we reviewed, 
has numerous potential negative consequences. For example, it raises 
concern about whether the Authority obtained the best value available 
in the marketplace for the goods and services that the Authority 
acquired through contracts. Furthermore, it raises concern about 
whether the Authority has (1) deprived prospective contractors of the 
chance to compete for contracting opportunities and (2) fairly 
evaluated all contractors that have competed for its procurements. 
Finally, by not following recognized competitive principles, the 
Authority could convey an appearance of favoritism in its contracting 
decisions. 

We provided a draft of this report for review and comment to the 
Department of Transportation and to the Authority. The department did 
not comment on the specific steps that it plans to take to address our 
recommendation that it follow up on the Authority’s actions to address 
our findings and recommendations. However, the department indicated 
that it would take “appropriate actions” to fulfill its obligations 
under the lease. The department also provided technical and clarifying 
comments, which we incorporated as appropriate. 

In a January 4, 2002, letter to us, the Authority disagreed with the 
report’s major conclusions; raised concern about our scope and 
methodology, including the principles that we used to assess the 
Authority’s contracting; and reiterated comments that it made to us in 
earlier letters. The Authority concurred with one of our 
recommendations, agreeing to publish an updated and more detailed 
version of its contracting manual for review and comment by the public 
and, thereafter, to make the procedures readily available. The 
Authority also said that it would “consider its approach” to pricing 
contract options when it revises its contracting procedures. However, 
the Authority did not comment on our other recommendations for 
correcting the problems that we identified. The Authority’s comments, 
as well as our evaluation of them, are discussed in detail at the end 
of this letter. The Authority’s January 4, 2002, letter and our 
supplementary comments on it appear in appendix IV. 

Given the Authority’s silence on most of our recommendations and its 
fundamental disagreement with our view about the meaning and 
applicability of the requirement for full and open competition, it 
appears doubtful that the Authority will, on its own initiative, take 
all of the actions that we believe are needed to meet the statutory 
and lease requirement pertaining to the Authority’s contracting 
practices. This is particularly troublesome given that the Authority 
recently embarked upon a multibillion-dollar construction program at 
Dulles. Furthermore, because the 1986 act does not specify the 
Department of Transportation’s role in overseeing the Authority’s 
contracting, it is unclear what the department will do to ensure that 
the Authority satisfies its obligations under the lease. Accordingly, 
we added a suggestion that Congress consider clarifying the 1986 act 
to specify that, as lessor, the department is responsible for ensuring 
that the Authority (1) fully complies with the contracting 
requirements imposed in the lease and (2) takes all steps needed to 
correct the problems that we identified. 

Background: 

Before the airports’ transfer to the Metropolitan Washington Airports 
Authority (MWAA), Dulles and Reagan National were operated by the 
Federal Aviation Administration and financed with federally 
appropriated funds. MWAA’s funding now comes from operational revenues 
(rents, payments from concessionaires, landing fees, utility sales, 
and passenger fees). MWAA also receives federal grant funds from the 
Airport Improvement Program[Footnote 5] as well as proceeds from bonds 
issued to finance its capital development program, which began in 1988. 

MWAA is governed by a board of directors which, by law, consists of 13 
members, including 5 members appointed by the governor of Virginia, 3 
members appointed by the mayor of the District of Columbia, 2 members 
appointed by the governor of Maryland, and 3 members appointed by the 
president of the United States with the advice and consent of the 
Senate.[Footnote 6] The board establishes policies pertaining to the 
airports’ operation. The board and its five committees generally meet 
on a monthly basis. The committees, comprising 4 to 5 board members, 
execute delegated responsibilities in areas such as business 
administration, finance, and planning. A chief executive officer 
appointed by the board performs day-to-day management. 

Program offices, such as MWAA’s Office of Engineering, identify 
procurement needs and forward them to MWAA’s Procurement and Contracts 
Department (its contracting office) for action. Procurement requests 
contain an estimate of the cost of obtaining the required goods or 
services. Thereafter, the contracting office develops a solicitation 
to seek contractors’ interest in supplying the goods and services and 
subsequently awards a contract to fill the procurement need. The 
contracting office is also responsible for making any changes to the 
contract after it is awarded. 

According to its contracting database, MWAA awarded 2,843 contracts 
for supplies and services, including construction, at an initial award 
amount (in constant 1999 dollars) of about $1.43 billion from January 
1, 1992, through December 31, 1999. On average, MWAA awarded about 355 
contracts annually over the 8-year period. The average value of the 
contracts when awarded was approximately $504,000. Contract 
modifications increased the cost of MWAA’s initial contract awards, 
however. Specifically, the amount authorized for the 2,843 contracts 
that MWAA awarded between 1992 and 1999 grew by about 38 percent—from 
about $1.43 billion at award to about $1.98 billion through December 
31, 1999 (in constant 1999 dollars). This cost growth most likely 
resulted from MWAA’s modification of contracts to extend the period of 
their performance and to purchase additional supplies and services. 

MWAA Has Not Satisfied Its Obligation to Publish the Procedures It 
Uses to Award Contracts Competitively: 

MWAA’s lease with the federal government requires it to award 
contracts for supplies and services exceeding $200,000 and all 
concession contracts “through the use of published competitive 
procedures.” MWAA is aware of this obligation and, in 1993, issued a 
contracting manual that it believes satisfied the requirement. 
[Footnote 7] While the 1993 guidance was announced publicly and is 
available to prospective contractors upon request, the guidance is 
inadequate in numerous respects. Thus, in our view, it does not 
satisfy MWAA’s obligation to contract using published competitive 
procedures. 

The clear intent of the statutory lease provision is to ensure that 
MWAA develops, publishes, and follows an orderly set of procedures for 
awarding contracts and concession franchises. Such procedures are 
meant to enhance competition and, when published, provide the means 
for contractors to understand MWAA’s contracting processes. Likewise, 
the requirement to publish MWAA’s contracting procedures is intended 
to provide assurance to prospective contractors that MWAA will 
actually follow its published procedures. Thus, in our opinion, to 
satisfy its obligation under the statutory lease provision, MWAA must 
ensure that its published procedures: 

* adequately explain its contracting practices to prospective 
contractors, 

* are current, and, 

* are those that it actually uses to award contracts and concession 
franchises. 

None of these requirements has been met. First, the manual that MWAA 
published in 1993 offers prospective contractors only limited 
information about its contracting processes. Instead of issuing a 
clear and well-defined set of procurement procedures governing its 
contracting processes, the 1993 guidance simply summarizes MWAA’s 
contracting policies. The detail that one would expect in a manual 
intended to familiarize potential contractors with MWAA’s contracting 
processes and to foster full and open competition is lacking. For 
example, the entire discussion of how MWAA solicits bids and proposals 
and makes awards—-the heart of the contracting process insofar as 
prospective contractors are concerned—-consists of only a brief 
description of the various procurement methods that MWAA could elect 
to use.[Footnote 8] 

Moreover, the information supplied in the 1993 manual is inadequate 
for informing prospective firms about MWAA’s contracting processes 
because the guidance provides MWAA with virtually unlimited latitude 
to decide— on a case-by-case basis—how to award its contracts and 
concession franchises. For example, regarding its negotiations with 
prospective contractors, the 1993 guidance merely indicates the 
following: 

“The Authority will select the proposal which offers the greatest 
overall benefit to the Authority in terms of the evaluation criteria 
listed in the Request for Proposals. If the determination is made to 
negotiate, negotiations generally [begin underline: will be: end 
underline] open to all offerors [prospective contractors] with a 
realistic chance of being awarded the contract (those in the 
competitive range) as determined by preliminary technical and economic 
evaluation. Best and final offers may be solicited from one or more 
offerors as appropriate.” [Underlining added.] 

The 1993 guidance states that, in certain circumstances, contractors 
with competitive proposals will be included in negotiations. The 
guidance does not, however, explain when such circumstances will 
arise. Furthermore, the 1993 guidance does not specify who will be 
invited to submit best and final offers, only that offers may be 
solicited when MWAA deems such an action “appropriate.” 

Second, MWAA has not updated its 1993 guidance to ensure that it is 
current. For example, the guidance states that MWAA’s board of review 
must review all contract awards. This board, however, was abolished in 
1996. Moreover, MWAA has not updated the guidance to reflect, among 
other things, long-standing changes in (1) how its board of directors 
has delegated contracting authority, (2) the names and addresses of 
personnel currently responsible for MWAA’s contracting activities, or 
(3) revisions to MWAA’s ethics requirements.[Footnote 9] 

Finally, MWAA does not use the 1993 guidance to award contracts 
involving non-concession-related goods and services. Instead, MWAA 
uses an unpublished manual that it developed in September 1998. 
[Footnote 10] The 1998 manual is far more detailed, substantive, and 
prescriptive than MWAA’s 1993 manual. For example, in contrast to the 
guidance in the 1993 manual, MWAA’s unpublished 1998 manual specifies 
that prospective contractors must be included in the competitive range 
for purposes of negotiations if their proposals have a reasonable 
chance of being selected for award. Furthermore, unlike the 1993 
guidance, the unpublished 1998 manual provides specific rules 
governing MWAA’s decision to dispense with negotiations. MWAA views 
the 1998 manual as internal guidance and, as a result, has not 
published it, posted it to its contracting Web site, or otherwise made 
it routinely available to prospective contractors.[Footnote 11] 

In January 2002, when we concluded our review, MWAA was in the process 
of updating its 1993 contracting guidance. When the update is 
approved, MWAA anticipates (1) posting the guidance on its contracting 
Web site and (2) placing a notice in The Washington Post to announce 
its availability. MWAA was also updating its detailed 1998 internal 
contracting guidance for awarding contracts for non-concession-related 
goods and services. According to MWAA, the revision will include 
information about its procedures for awarding concession franchises. 
Acknowledging that its detailed internal contracting procedures should 
be made widely available to interested parties, MWAA indicated that it 
would take steps to disseminate the updated guidance, including 
establishing a link to the guidance through its contracting Web site. 

MWAA Has Not Always Satisfied Its Obligation to Obtain, to the Maximum 
Extent Practicable, Full and Open Competition: 

Despite its obligation under the statutory lease provision, MWAA did 
not obtain, to the maximum extent practicable, full and open 
competition for 15 of the 35 contracts that we reviewed. MWAA’s 
actions on 12 of the 13 contracts that MWAA identified as awarded 
using full and open competition did not comply with one or more of the 
recognized principles underlying full and open competition. 
Furthermore, while the use of less than full and open competition for 
19 of the remaining 22 contracts appeared acceptable given the 
contracts’ circumstances, we believe that MWAA missed opportunities to 
obtain, to the maximum extent practicable, full and open competition 
on 3 of the 22 contracts. The 3 awards as well as 2 others that we did 
not otherwise question were not approved by MWAA’s board, as required 
for sole-source awards. We discussed these findings with officials 
from MWAA, and, by letters dated June 29, 2001, and July 9, 2001, MWAA 
disagreed with many of the problems that we identified. As a result, 
we incorporated additional information about MWAA’s views and about 
our rationale for the concerns that we identified in our draft report. 
MWAA also disagreed with our analyses of its contracting actions in 
its January 4, 2002, comments on our draft report. (Our discussion of 
these comments appears at the end of this letter and in appendix IV.) 

The Benefits of Full and Open Competition Are Well Established: 

The use of full and open competition has long been recognized as 
promoting several important objectives. It saves money by obtaining 
lower prices and encouraging prospective contractors to focus on ways 
to provide more value to their customers. It also promotes fairness 
and equity through the use of open, impartial, and objective selection 
processes. Finally, full and open competition promotes innovative 
solutions and approaches and technical improvements by encouraging 
individual incentive. Such competition is achieved when all 
prospective contractors are provided an equal opportunity to compete 
successfully for a contract. MWAA’s guidance recognizes the importance 
of full and open competition. Its 1993 contracting manual, for 
example, states that full and open competition is the “cornerstone” of 
MWAA’s contracting process and indicates that it is to be used “
whenever practicable.” Similarly, MWAA’s unpublished 1998 contracting 
guidance emphasizes the use of full and open competition “to the 
maximum extent practicable.” 

Twelve of the 13 Contracts Identified as Awarded Using Full and Open 
Competition Were Deficient in One or More Respects: 

As discussed in appendix I, the concept of full and open competition 
embodies a number of fundamental principles. To achieve full and open 
competition, a contracting organization must, among other things, 

* adhere to the evaluation factors and processes that it specified in 
its contract solicitation, 

* solicit competition for all of the needs that it could reasonably 
anticipate acquiring under the contract, and, 

* ensure that any modification to a contract is within the scope of 
work that it initially solicited. 

As shown in table 1, 12 of the 13 contracts that MWAA identified as 
awarded using full and open competition were deficient in one or more 
of these areas. 

Table 1: Contract Findings: Compliance with Selected Principles of 
Full and Open Competition: 

Contractor: Dynamic Technology Systems, Inc. 
Award date: 12/97; 
Weaknesses found in MWAA’s evaluation processes: [Check]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$298,000. 

Contractor: Motorola, Inc. 
Award date: 1/97; 
Weaknesses found in MWAA’s evaluation processes: [A]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$9,322,000. 

Contractor: Sedgwick James of Virginia, Inc. 
Award date: 5/94; 
Weaknesses found in MWAA’s evaluation processes: [A]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$29,578,000. 

Contractor: Skidmore, Owings & Merrill; 
Award date: 7/89; 
Weaknesses found in MWAA’s evaluation processes: [Check]; 
Competition not solicited for all requirements: [Empty]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$41,537,000. 

Contractor: CACI-IMS; 
Award date: 5/93; 
Weaknesses found in MWAA’s evaluation processes: [Check]; 
Competition not solicited for all requirements: [Empty]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$11,379,000. 

Contractor: Hensel Phelps Construction Co. 
Award date: 2/98; 
Weaknesses found in MWAA’s evaluation processes: [Check]; 
Competition not solicited for all requirements: [Empty]; 
Added out-of-scope work: [Check]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$18,755,000. 

Contractor: ATC/Vancom Management Services Limited Partnership;
Award date: 6/95; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Check]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$6,999,000. 

Contractor: Quimex, Inc. 
Award date: 2/93; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$800,000. 

Contractor: Merchant’s Tire; 
Award date: 12/93; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$434,000. 

Contractor: Centennial One, Inc. 
Award date: 2/96; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$12,240,000. 

Contractor: Motor Coach Industries, Inc. 
Award date: 6/97; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Check]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$3,122,000. 

Contractor: Parsons Management Consultants; 
Award date: 3/88; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Empty]; 
Added out-of-scope work: [Check]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$229,608,000. 

Contractor: Burns and McDonnell[B]; 
Award date: 8/93; 
Weaknesses found in MWAA’s evaluation processes: [Empty]; 
Competition not solicited for all requirements: [Empty]; 
Added out-of-scope work: [Empty]; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$4,017,000. 

Total: 
Weaknesses found in MWAA’s evaluation processes: 4[A]; 
Competition not solicited for all requirements: 8; 
Added out-of-scope work: 3; 
Value as of 12/31/99 (dollars rounded to the nearest thousand): 
$368,089,000. 

[A] MWAA’s process for evaluating contractor proposals was potentially 
problematic for 2 of the 13 procurements involving Motorola, Inc., and 
Sedgwick James of Virginia, Inc. 

[B] Contracting actions for 1 contract—Burns and McDonnell—-complied 
with the selected principles of full and open competition. 

Source: GAO analysis of MWAA’s contracting data. 

[End of table] 

MWAA Did Not Adhere to the Evaluation Factors and Processes It 
Specified in 4 of 13 Contract Solicitations: 

Documentation pertaining to 4 of the 13 contracts that we reviewed 
revealed deficiencies in MWAA’s evaluation of contractor proposals 
that limited the ability of prospective contractors to compete fully 
for MWAA’s contracts. Like others with procurement needs, MWAA seeks 
proposals from contractors by distributing a solicitation that (1) 
describes the goods and services it needs; (2) identifies various 
factors—such as cost, technical excellence, management capability, and 
past performance—that will be used to evaluate the proposals; and (3) 
explains how the selection process will be conducted. To facilitate 
competition, solicitations must be clear and complete so that all 
interested firms have a common understanding of what is being sought 
and so that they can prepare proposals responsive to the 
organization’s need. While a contracting organization need not 
identify all the specific numeric values that it intends to apply to 
each evaluation factor, the concept of full and open competition 
necessitates that an organization’s solicitations specify the relative 
importance of the evaluation factors that it will use in the selection 
process and, thereafter, that the organization follow the factors and 
processes that it specified. While MWAA’s 1993 contracting guidance is 
silent on this matter, its unpublished 1998 contracting guidance 
requires MWAA to inform prospective contractors about the relative 
importance of its evaluation factors. The 1998 guidance, however, does 
not discuss the importance of adhering to the evaluation factors and 
processes that it specifies in its solicitations. 

Two of the four contracts that we questioned were scored in a 
different manner from that specified in MWAA’s solicitation. MWAA’s 
November 1997 solicitation for design and construction services for a 
regional airline terminal at Dulles, for example, identified six 
evaluation factors, including “experience providing design/build 
services on projects of similar dollar value and complexity.” Although 
this evaluation factor was listed fourth in relative importance, MWAA 
weighed it the same as the first-ranked factor and higher than two 
other criteria that MWAA’s solicitation had indicated would be of 
greater importance in securing the award. A similar problem occurred 
in MWAA’s evaluation of contractors’ proposals for design work related 
to the expansion of the main terminal at Dulles. According to MWAA’s 
contracting officials, the scoring irregularities on the first 
solicitation occurred because of time constraints that had precluded 
members of its technical review team from establishing specific 
scoring weights for the evaluation factors before issuing the 
solicitation. Regarding the other solicitation, MWAA contracting 
officials explained that for evaluation purposes, MWAA’s technical 
review team changed the relative weight of the factors that had been 
specified in the solicitation to reflect the team’s conflicting view 
about the relative importance of the evaluation factors that had been 
specified in the solicitation. In neither instance were prospective 
contractors notified of the change or afforded an opportunity to amend 
their proposals. 

MWAA also did not follow the evaluation processes that it specified in 
two other solicitations. The solicitations described an evaluation 
process in which cost and technical factors would be evaluated 
concurrently in selecting a successful contractor. MWAA assessed the 
contractors’ proposals against the technical factors identified in the 
solicitations. However, instead of considering all of the contractors’ 
cost proposals, MWAA considered cost for only those firms that it 
deemed to be the “most technically qualified.” As a result, MWAA 
prematurely eliminated 13 firms without determining whether the 
contractors’ proposed cost would have offset their lower technical 
scores. 

Finally, while MWAA followed the process it specified in two other 
solicitations, the process used was, in our view, potentially 
problematic. The two solicitations informed prospective contractors 
that MWAA would identify the “most qualified” proposals and, from 
these, choose the proposal with the lowest cost for award. MWAA 
assigned predetermined numerical scores—-an 80-percent “threshold” in 
one instance and an 85-percent “threshold” in the other-—and used the 
scores to reject, on the basis of technical factors alone, all of the 
proposals that did not meet or exceed these scores. Although this 
process might not have disadvantaged contractors who competed for 
these procurements,[Footnote 12] evaluating contractors against 
predetermined technical scores can nevertheless be problematic. 
Specifically, because technical merit and price are generally directly 
correlated,[Footnote 13] establishing thresholds to evaluate proposals 
favors those firms that score just above the technical threshold, 
since their price should be lower, all other considerations being 
equal. Conversely, such a process could harm firms with technical 
scores just below the threshold since, technically, their proposals 
would have been roughly equivalent and might have been available at a 
lower cost. 

In its June 29, 2001, letter to us, MWAA agreed that to have a level 
playing field for competition, it must (1) evaluate contract proposals 
in accordance with its solicitations and (2) notify all offerors of 
any changes it makes to its evaluation processes. According to MWAA, 
it follows these practices and the “isolated” examples we identified 
leaves the reader with the mistaken impression that these are not 
MWAA’s accepted practices. Moreover, MWAA noted that [Begin 
underlining: “using a minimal technical acceptance: end underlining] 
basis for eliminating unqualified offerors is acceptable if adequately 
communicated in the solicitation [underlining added].” Likewise, MWAA 
said that its use of thresholds to evaluate contractor proposals is 
acceptable if appropriately documented. Thus, in MWAA’s view, it can 
resolve our concerns by ensuring that its solicitations clearly 
specify the evaluation processes that it intends to use. In a 
subsequent letter to us MWAA further explained that “in the future we 
will ensure that when technical evaluation criteria alone are to be 
used to determine [the] competitive range [for a procurement], the 
solicitation will indicate that MWAA may make this determination based 
solely on technical criteria” [underlining added]. According to MWAA, “
cost, of course, will be evaluated for those firms included in the 
competitive range” [underlining added]. Finally, MWAA’s June 29, 2001, 
and July 9, 2001, letters to us indicated that we have not 
demonstrated any adverse impact on contractors who were involved in 
the procurements that we questioned. 

Because the contracts we examined were not selected on the basis of a 
statistically valid sampling approach, we cannot determine the 
frequency of problems in MWAA’s universe of contracts. However, MWAA’s 
unpublished 1998 manual permits the use of thresholds for evaluating 
contractor proposals and considers it an acceptable contracting 
practice. We disagree that using a predetermined score, or threshold, 
to evaluate contractor proposals is a prudent or appropriate 
contracting practice. As recognized in MWAA’s unpublished 1998 
guidance, to promote full and open competition, agencies are expected 
to consider all proposals that have a reasonable chance of being 
selected for award. Such a process is intended to reflect all of the 
qualitative differences between the proposals and to identify a 
natural cutoff point between proposals that have a realistic chance of 
receiving the contract award and those that do not. As discussed, 
establishing a cutoff point, or threshold, before all of the benefits 
and disadvantages of the proposals have been fully considered could 
disadvantage firms that have scores just below the threshold score and 
might offer a roughly comparable technical proposal at a lower cost. 

Furthermore, MWAA’s practice of not considering cost for all 
contractors-—when it has committed to do so—-and its comments 
regarding this practice reflect a fundamental misunderstanding about 
the purpose and use of determinations pertaining to a proposal’s 
“technical acceptability” and a proposal’s subsequent inclusion in the 
“competitive range.” A determination that a proposal cannot satisfy an 
organization’s needs and is therefore not technically acceptable 
(i.e., a technical acceptability determination) differs markedly from 
a determination that the firm’s proposal is outside of the competitive 
range (i.e., a determination that the proposal has no realistic chance 
of being selected for award). A determination about whether a 
contractor’s proposal is within the competitive range is based on the 
evaluation of all of the factors specified in the solicitation, not 
just the technical factors. 

Moreover, we do not agree that MWAA can overcome our concerns solely 
through the use of clearer solicitation language. To the extent that 
MWAA expresses its intent to consider cost in awarding its contracts, 
as indicated in its policy,[Footnote 14] MWAA must do so. On the other 
hand, if MWAA finds that it needs to evaluate proposals only for 
technical acceptability (i.e., to establish whether a proposal meets 
MWAA’s minimum requirements), it can request technical proposals from 
firms and, on the basis of its evaluation of these proposals, seek 
cost proposals from only those firms that it finds acceptable. MWAA 
could also choose to award a contract based solely on technical 
considerations (i.e., select the most qualified firm). However, given 
the importance of cost in awarding contracts, public contracting 
entities generally would avoid such an approach. 

Finally, concerning MWAA’s view that we have not demonstrated any 
adverse impact on contractors involved in these procurements, we note 
that it is not always possible to quantify the extent to which 
offerors might have been harmed by MWAA’s failure to follow its 
specified evaluation processes. For example, it is impossible to 
discern how contractors might have revised their proposals if they had 
been advised of changes in the relative importance of MWAA’s 
evaluation factors. Likewise, because MWAA did not open all of the 
contractors’ cost proposals, we do not know how individual 
procurements might have been affected had cost been considered in 
making the awards. Most important, in evaluating whether such 
practices are appropriate, it is not necessary to demonstrate that 
someone was injured by a noncompetitive practice. 

MWAA Did Not Solicit Competition for All of Its Procurement Needs on 8 
of the 13 Contracts Examined: 

To obtain full and open competition, an organization must solicit 
competition on all of the needs that it knows it will procure under 
the contract as well as those it can reasonably anticipate procuring 
under the contract. Potential needs are generally communicated to 
contractors in the form of “options,” which, if exercised, allow the 
organization to order additional work by extending the duration of 
contracts or by purchasing additional goods and services. To meet the 
requirement for full and open competition, contract options must be 
priced and evaluated in making the initial or underlying contract 
award. If a contract was awarded on a fully competitive basis, the 
acquisition of additional goods and services through the exercise of a 
previously priced and evaluated option would be a competitive 
acquisition. In contrast, exercising a contract option that was not 
priced and evaluated (an unpriced option) is tantamount to procuring 
the additional work on a sole-source basis because, even if the 
initial contract work was subject to competition, the additional work 
specified in the option was not. Neither MWAA’s 1993 nor its 
unpublished 1998 contracting guidance specifically addresses options 
or the necessity of obtaining and evaluating prices for the entirety 
of its procurement need to avoid the subsequent acquisition of work on 
a sole-source basis. 

MWAA did not seek competition for all the goods and services that it 
expected to acquire under 8 of the 13 contracts that we reviewed. 
Furthermore, while MWAA’s modification of these contracts to acquire 
the additional goods and services should have been treated as sole-
source procurements, MWAA did not prepare written justifications for 
any of the contract modifications—-as required by its contracting 
procedures-—or seek its board of directors’ approval for exceptions to 
the use of full and open competition, as required by both its 
contracting procedures and its lease with the federal government. 
[Footnote 15] The most common problem involved MWAA’s practice of 
exercising unpriced options to extend the duration of its contracts. 
Specifically, while MWAA generally awarded 3-year contracts-—contracts 
with a base year and 2 option years—-it did not evaluate pricing for 
the expected duration of six of the eight contracts and, instead, 
considered the price for only the base period of the contract— 
typically the first year. After making the award, MWAA consistently 
exercised the unpriced options to extend the contracts’ duration— 
typically in 1-year increments for a period of 2 years—and entered 
into sole-source negotiations to establish price. Work associated with 
the contract extensions was not subject to any price competition and 
was expected to cost MWAA at least $11.4 million. 

For three contracts, MWAA did not solicit competition for its 
acquisition of additional goods and services that had not been priced 
and evaluated as part of MWAA’s initial contract awards. For example, 
while MWAA’s May 1997 solicitation for six buses included an option to 
purchase up to three more buses, MWAA did not evaluate the price for 
the additional buses in awarding the contract—even though it had 
requested pricing for all nine buses. Nevertheless, in August 1998, 
MWAA exercised the option to purchase three buses at a cost of about 
$1 million.[Footnote 16] 

In another example, although MWAA’s solicitation for a mobile radio 
system included an option to purchase and install a supplemental 
communication system to eliminate “dead spots” in airport facilities, 
MWAA did not obtain competitive pricing for the option. According to 
MWAA’s contracting officials, pricing was not obtained because 
construction had not progressed sufficiently to allow the system to be 
designed and installed in the airport facilities. MWAA subsequently 
stated that before the initial award it had not yet confirmed whether 
the new terminal arrangement at Reagan National would require 
supplemental communication coverage. Although this may have been the 
case for some of the facilities, at least two facilities—-the Thomas 
Avenue tunnel and the existing terminal at Reagan National-—were in 
existence years before MWAA finalized and issued the solicitation. 
Moreover, two other facilities—-the boiler plant at Reagan National 
and the extensions to the main terminal at Dulles—-were completed 
before MWAA awarded the contract in January 1997.[Footnote 17] 
Although MWAA was aware of this, it did not amend the solicitation to 
obtain competitive pricing for the option or, alternatively, to 
conduct a separate competitive procurement for the additional work. 
Furthermore, MWAA never confirmed whether any of the airports’ 
facilities would need supplemental communication coverage. Instead, in 
March 1997—only 2 months after awarding the contract— MWAA provided 
the successful contractor with a list of facilities to survey for dead 
spots and in May 1997 modified the contract to purchase the 
supplemental communication system for some of the airports’ 
facilities. The additional work cost nearly $2.4 million and was not 
subject to any price competition. 

Finally, even though MWAA anticipated adding about 257,000 square feet 
of space to a forthcoming contract for cleaning services related to 
the expansion of the main terminal at Dulles airport, MWAA’s contract 
solicitation did not seek competitive prices for this eventuality. 
Instead, about 4 months after it awarded the initial contract, MWAA 
entered into negotiations—on a sole-source basis—with the successful 
contractor and modified the contract to satisfy its need for 
additional cleaning services. MWAA agreed to pay the contractor about 
$656,000 more annually for the additional work. This agreement 
represented an annual increase of almost 23 percent over the contract’
s initial award amount and was not subject to any price competition. 
According to MWAA’s July 9, 2001, letter to us, MWAA did not request 
and evaluate pricing for cleaning the additional space as part of its 
initial award because its cleaning requirements “were different and 
changing.” Specifically, MWAA noted that “there were new types of 
service related variables such as types of floors, surfaces, and 
passenger flow arrangements. In addition, construction carryover 
considerations affected the frequency of cleaning needs. Most 
importantly, a new ticket counter arrangement with the airlines was 
anticipated.” 

MWAA’s failure to consider the entirety of its procurement need also 
resulted in another undesirable consequence. Because MWAA generally 
considered contract costs for only the first year of its contracts, 
MWAA treated three of the eight contracts as small purchases 
(contracts valued at $200,000 or less) and, thus, did not advertise 
them-—as required by MWAA’s contracting policy-—to ensure that all 
interested contractors had an equal opportunity to compete for the 
awards.[Footnote 18] The three contracts each exceeded $200,000 and 
had a total value of about $1.5 million. MWAA acknowledged that it did 
not advertise the three procurements. Nevertheless, it felt that each 
of the procurements had been subject to full and open competition. 
MWAA noted that a newspaper advertisement is not the only way to 
achieve full and open competition and indicated that it takes other 
steps to advertise its contracting opportunities. Such steps include 
posting contracting opportunities to MWAA’s contracting Web site, 
which is publicly accessible, and to its bulletin board of 
solicitations in its office at Reagan National. While the competition 
on one of the three procurements did not fully satisfy MWAA’s 
requirement for advertising, we agree that it appears to have been 
adequate.[Footnote 19] However, MWAA limited competition on the other 
two procurements to a group of “known suppliers.” Limiting competition 
to only those suppliers that are known to MWAA does not constitute 
full and open competition, since other firms may also be interested in 
and capable of accomplishing the work. 

Finally, we found little documentation of MWAA’s efforts to determine 
that the prices for additional goods and services resulting from 
changes in the scope and terms of MWAA’s contracts were fair and 
reasonable. As MWAA’s 1998 contracting procedures recognize, sound 
contracting principles necessitate that an organization award 
contracts for goods and services at fair and reasonable prices. Such 
prices are expected to result from full and open competition. Thus, 
when contract changes are involved, an organization must use other 
methods to assure itself that the cost of the changes is fair and 
reasonable. Except for the construction-related contracts that we 
examined, we found little evidence of MWAA’s efforts to do so. The 
contract files, for example, rarely demonstrated that MWAA (1) 
prepared an independent cost estimate for the proposed contract 
changes, (2) obtained market prices from the contractor’s competitors, 
or (3) considered prices previously paid for similar goods and 
services before entering into sole-source negotiations with a 
contractor for additional goods and services. Moreover, the contract 
files rarely documented the result of MWAA’s contract negotiations. 
[Footnote 20] Without documentation to the contrary, these findings 
raise questions about whether MWAA obtained fair and reasonable prices 
for its contract modifications. 

MWAA contracting officials agreed that, in many instances, they should 
have done a better job of documenting their efforts to ascertain 
whether prices were fair and reasonable. Nevertheless, in their view, 
the negotiated prices were fair and reasonable. MWAA disagreed with 
the remainder of our findings in this area. For example, MWAA 
disagreed that it should have obtained and evaluated pricing on its 
contracts for a supplemental communication system and airport cleaning 
services because, in MWAA’s view, there were too many unknown 
variables involved in the procurements. According to MWAA’s July 9, 
2001, letter to us, 

“... if there is risk of a change in the requirements or conditions 
for performance…adherence to fundamental principles of evaluating 
proponents would dictate that due to technological risk and changing 
circumstances the options [should] not be evaluated[;] otherwise the 
award is likely to be premised on performance that is not in 
accordance with what will be the actual requirements.” 

Thus, as a matter of policy, MWAA does not currently require 
contractors to price additional option years contemplated in its 
solicitations. Instead, according to MWAA officials, MWAA prefers to 
negotiate the price for additional work when it exercises the option. 
According to the contracting officials, MWAA’s approach is more cost-
effective because it avoids being locked into prices that may be 
influenced by unstable market conditions, inflation, or other factors. 
Finally, while not providing any information supporting its view, MWAA’
s June 29, 2001, letter to us indicated that MWAA believes that the “
commercial world” and other airports commonly use unpriced options. 
Thus, MWAA indicated that it plans to revise its procedures in an “
attempt to provide a foundation for [the] use of this commercial 
mechanism.”[Footnote 21] 

We continue to believe that MWAA, using its best judgment, could have 
(1) made a relatively accurate assessment of its future requirements 
under the communications and cleaning contracts, (2) sought pricing on 
the basis of its assessments, and (3) evaluated the contractors’ 
prices in making its initial contract awards. For example, using the 
terminal’s detailed construction plans and specifications, MWAA could 
have estimated the amount of carpeted area in the terminal and the 
number of times per week that it would need to be vacuumed as well as 
the amount and frequency of tile or other flooring to be mopped and, 
thereafter, requested contractors to provide unit pricing for each of 
these tasks. After award, if changes in the amount or frequency of the 
cleaning occurred, MWAA could have used the contractor’s unit pricing 
to adjust pricing under the contract. According to the deputy 
commissioner of the Public Buildings Service of the U.S. General 
Services Administration, the General Services Administration-—the 
landlord for the federal government-—typically uses this approach to 
award cleaning contracts for buildings under construction. 
Furthermore, MWAA could have used appropriate contract language to 
protect itself from uncertainties that might have resulted in changes 
to MWAA’s original assessment of its needs. Alternatively, if MWAA 
considered the two procurements too uncertain to estimate its future 
needs, MWAA could have conducted new procurements. For example, for 
the period in which MWAA was defining its future cleaning needs at 
Dulles, MWAA could have awarded a short-term contract for the existing 
facilities and, thereafter, conducted a new procurement for cleaning 
the entire airport. 

We also disagree with MWAA’s other views regarding the appropriateness 
of using unpriced options. From the broadest perspective, MWAA’s use 
of unpriced options represents an “option” in name only. Specifically, 
for the contracts we discussed, because MWAA generally did not ask the 
contractors to provide pricing for its anticipated options, MWAA did 
not establish a unilateral, contractual right to require the 
contractors to perform the future work at an agreed-upon price. 
[Footnote 22] Thus, when MWAA subsequently elected to obtain the 
additional goods and services, it had to enter into price 
negotiations. Such a contracting approach results in the award of 
preplanned, noncompetitive (sole-source), follow-on contracts. If 
these sole-source awards had been adequately justified, MWAA’s board 
of directors could have approved them. However, MWAA did not treat the 
procurements as sole-source awards and did not seek the board’s 
approval. 

Additionally, MWAA’s view that its use of unpriced options is more 
cost-effective than a full and open competitive approach conflicts 
with both the guidance in MWAA’s unpublished 1998 contracting manual 
and the experience of other public entities, including the federal 
government. MWAA’s contracting guidance recognizes, for example, that 
“negotiation(s) without the element of competition [i.e., a sole-
source procurement] is difficult” in arriving at a fair and reasonable 
contract price.[Footnote 23] Furthermore, because MWAA is not 
obligated to exercise a priced option if its interests are not well 
served in doing so, MWAA cannot be locked into paying unfavorable 
prices. Instead, MWAA can always choose to resolicit its 
requirement.[Footnote 24] 

Finally, in our view, the question of whether the use of unpriced 
options is common in the commercial world is not relevant to MWAA’s 
position. MWAA is not a private entity with authority to operate 
freely in the commercial world. Rather, MWAA is a public entity 
subject to contracting requirements, including the use of full and 
open competition, that were set forth in its lease with the federal 
government. As a result, we do not agree that MWAA’s plan to revise 
its contracting procedures to “attempt to provide a foundation” for 
using unpriced and unevaluated options will resolve our concerns. 

MWAA Added Out-of-Scope Work to 3 of the 13 Contracts: 
When an organization needs to acquire goods and services, it can 
either conduct a separate procurement or use an existing contract. 
However, using an existing contract is appropriate only if the 
acquisition is within the scope of the original contract. Modifying a 
contract to obtain goods and services that are outside the general 
scope of the contract (i.e., out-of-scope work) is tantamount to 
awarding the work on a sole-source basis because the additional work 
was not subject to competition.[Footnote 25] MWAA’s 1993 contracting 
guidance does not address this matter. However, its unpublished 1998 
internal guidance specifically precludes contracting officers from 
adding new work to an existing contract when the work is beyond the 
general scope of the contract. Instead the work is to be treated as a 
new procurement. According to the 1998 guidance, “although it may be 
administratively easier to add new work to an existing contract, this 
is a sole-source, noncompetitive approach which may not be as cost 
effective as treating the work as a new competitive procurement.” 

Although initially subject to full and open competition, 3 of the 13 
contracts that we reviewed were subsequently modified to obtain goods 
and services that were beyond the contracts’ original scope of work. 
In each case, the value of the goods and services included in the 
modification exceeded $200,000 and the modification was subject to the 
statutory lease requirement for full and open competition. The first 
out-of-scope modification occurred on MWAA’s 1995 contract for bus 
services. The solicitation and subsequent contract required the 
contractor to provide drivers and administrative support for the daily 
operation of a bus system between the airports and other area 
locations. The buses were to be supplied by MWAA. In April 1996, MWAA 
modified the contract to lease four used buses for a period of up to 3 
years with an option to purchase the buses. The lease and purchase of 
the buses were not subject to competition as part of the contract 
solicitation and clearly constituted an out-of-scope contract 
modification, since neither the lease nor purchase of the buses had 
anything to do with obtaining drivers and administrative support for 
the bus service. According to contracting officials, the contract 
modification was needed to meet operational needs until MWAA could 
acquire new buses. Even though MWAA did not prepare a sole-source 
justification for the modification or seek the board’s approval for an 
exception to the use of full and open competition, MWAA’s July 9, 
2001, letter to us agreed that the contract modification was outside 
the scope of the contract. The out-of-scope modification totaled about 
$360,000. 

Another example of contract modifications for out-of-scope work 
stemmed from MWAA’s February 1998 contract for a portion of the design 
and construction of a regional airline terminal at Dulles. The 
contract was awarded for $9.7 million using full and open competition 
and was part of a much larger construction effort that included, among 
other things, the acquisition of terminal furnishings, such as 
communications and flight information display systems, interior 
furnishings, and public telephone systems. According to MWAA, it 
specifically excluded the terminal furnishings from the contract’s 
solicitation because it intended to obtain the furnishings under 
separate, competitive procurements. MWAA did not follow through with 
this plan and, despite guidance in its unpublished 1998 manual, 
modified the contract on at least 10 occasions in 1998 and 1999 to 
acquire the out-of-scope furnishings. According to MWAA personnel, 
MWAA modified the contract instead of soliciting competition for the 
furnishings because of its successful experience with the contractor 
on another airport project. Also, MWAA officials stated that prudent 
management dictated that MWAA trade the benefits of obtaining full and 
open competition with the necessity of accomplishing the work quickly 
to satisfy its operational needs for the new terminal. MWAA did not 
justify the modifications as sole-source procurements or seek 
exceptions to the use of full and open competition from its board of 
directors. Contract modifications for the out-of-scope work totaled 
about $2.1 million. 

MWAA does not agree that its acquisition of terminal furnishings 
involved a series of sole-source procurements. According to MWAA, its 
decision to obtain the additional work under the existing contract 
rather than to procure the work through a series of procurements, as 
had been originally planned, was justified by the urgency of the 
project. According to MWAA’s July 9, 2001, letter to us, “the only 
deficiency with this procurement action may be a lack of adequate 
documentation of the urgency.” MWAA further stated that there “was no 
perceived detrimental effect” but considerable efficiency in using one 
contractor to handle the various procurements. We disagree with MWAA’s 
assessment that the contract modifications did not constitute sole-
source procurements. Moreover, MWAA’s subsequent finding of “urgency” 
is not supported by documentation in the contract file. Instead, MWAA 
consciously excluded the work for the terminal’s furnishing from the 
contract’s solicitation because, at that time, it intended to award 
the work under separate, competitive procurements. Work specifically 
excluded from a solicitation cannot, after the contract’s award, be 
viewed as being within the contract’s scope. Furthermore, even if 
there were efficiencies associated with using one contractor to handle 
the procurement, we do not agree that there was no detrimental effect 
to other contractors who, if afforded the opportunity, might have been 
interested in competing for this work. 

The final example of modifications to obtain out-of-scope work 
involved MWAA’s contract for architecture and engineering support 
services for MWAA’s capital development program at Reagan National and 
Dulles. According to the solicitation, the program was expected to 
take 5 years and cost from $700 million to $1 billion. MWAA awarded a 
3-year contract in 1988 and extended it for another 3 years in 1991. 
While this 6-year period roughly approximates the scope of work 
specified in MWAA’s solicitation, MWAA extended the contract in 3-year 
increments in 1994, 1997, and 2000-—for a total of 9 additional years. 
According to an internal memorandum discussing MWAA’s rationale for 
the most recent contract extension in December 2000, the extension was 
needed so that the contractor could, among other things, assist in 
overseeing (1) the completion of work related to the airports’ 
original development plan and (2) a new 6-year, $3.4 billion 
development plan that MWAA initiated at Dulles in August 2000. 

MWAA does not agree that the latter three contract extensions should 
have been treated as sole-source procurements and did not prepare sole-
source justifications for the extensions or obtain exceptions to the 
use of full and open competition from MWAA’s board of directors. 
According to MWAA officials, while the initial 5-year estimate was 
overly optimistic, MWAA envisioned that the contract would span the 
entirety of its original development program.[Footnote 26] In support 
of this view, the officials noted that the contract does not specify a 
maximum time frame for completing the contract. Thus, according to 
MWAA, it can legitimately extend the contract until at least 2008 when 
the last of the projects identified in the airports’ original 
development plan are scheduled for completion. We disagree. In our 
view, all of the contract extensions beyond 1994—-the contract’s 6th 
year-—represent work beyond the scope of what MWAA offered for 
competition in 1988. The solicitation clearly anticipated a contract 
for professional services for a period approximating 5 years. Finally, 
although the contractor was asked to prepare MWAA’s original capital 
development plan, the solicitation did not (1) specify that the 
contractor was to oversee the plan’s implementation until completion 
or (2) anticipate the contractor’s involvement in the new development 
plan that MWAA initiated in August 2000. The contract, which is 
currently scheduled to expire in December 2003, is now in its 13th 
year and had cost about $230 million through December 31, 2000. 

MWAA noted that although its board of directors was aware and 
supportive of the contract extensions, it now regrets not having 
sought the board’s approvals. According to MWAA, the approvals would 
have eliminated even the shadow of a doubt about the propriety of MWAA’
s contract extensions. MWAA explained that it would have been 
detrimental to initiate a change in its program management services 
during the high growth and highly dynamic period between 1995 and 2000 
because of the need to address, among other things, protracted and 
ongoing issues involving an unfinished project in MWAA’s original 
capital development project. Thus, in MWAA’s view, we did not 
adequately consider the importance of maintaining continuity in its 
program support during this period. We disagree. Under the terms of 
MWAA’s lease with the federal government, it is the responsibility of 
MWAA’s board of directors to decide whether MWAA’s desire for 
continuity necessitated a series of sole-source contract extensions. 
The extensions in question were not competed, and MWAA staff did not 
present the sole-source contract extensions, along with a 
justification supporting each extension, to the board. Accordingly, 
the board did not approve them. 

Finally, for the three procurements involving out-of-scope work, we 
found little evidence of MWAA’s efforts to establish that the 
negotiated prices for contract changes were fair and reasonable. MWAA 
acknowledged that the three contract files do not adequately document 
actions taken by its contracting officers to determine that pricing 
was fair and reasonable. Nevertheless, MWAA indicated that the prices 
were fair and reasonable. 

MWAA Missed Opportunities to Compete 3 Contracts It Awarded Using Less 
Than Full and Open Competition in 1998 and 1999: 

While the use of less than full and open competition for 19 of the 22 
contracts in the second group of contracts that we reviewed appeared 
acceptable given the circumstances,[Footnote 27] we believe that MWAA 
missed opportunities to obtain competition for 3 of the 22 contracts. 
The contracts were awarded to United Airlines for $10.6 million for 
improvements at Dulles and included the design and construction of (1) 
office space for federal agencies that process international 
travelers, (2) 12 passenger-screening checkpoints, and (3) an outbound 
baggage-handling system. While each of the contracts exceeded 
$200,000, MWAA did not consider the statutory requirement for full and 
open competition applicable to the awards because, according to MWAA, 
the work was accomplished under amendments to its sublease with United 
and involved improvements to United’s facilities or areas directly 
associated with the airline’s facilities.[Footnote 28] 

MWAA’s lease with the federal government allows MWAA to enter into 
subleases with airlines for the use of the airports.[Footnote 29] 
Also, MWAA can allow airlines and other tenants to make improvements 
in areas that they sublease from MWAA.[Footnote 30] Improvements that 
are made by and for the exclusive benefit of an airline in space that 
it sublets from MWAA are not subject to the requirement for full and 
open competition. However, as specified in MWAA’s lease with the 
federal government, airline subleases cannot be used to avoid any of 
MWAA’s obligations under the lease.[Footnote 31] 

In our view, each of the three projects undertaken by United Airlines 
was MWAA’s-—not the airline’s-—acquisition and, therefore, subject to 
the requirement for full and open competition. We reached this 
conclusion because: 

* the work included in each of the projects was an integral part of 
MWAA’s capital development program at Dulles and was performed on 
MWAA’s behalf, 

* the work was performed on MWAA’s premises—not in areas subleased by 
United, 

* MWAA—-not United-—received immediate title to all of the 
improvements, and, 

* each of the projects served interests beyond those of United. 

In the first case, MWAA and United agreed that United would, among 
other things, construct new offices and other facilities for federal 
agency staff who process travelers in the international arrivals 
building and upgrade the fire alarm and telecommunications systems in 
the affected space. According to MWAA, United arranged to perform the 
work because it, as the largest international carrier at Dulles, was 
the primary beneficiary of the federal processing services. 
Representatives of MWAA told us that United sometimes uses the 
international arrivals building for international flights that 
terminate at Dulles. However, according to the officials, flights 
connecting to other United locations generally use a separate United 
facility located in the midfield of the airport—an area well away from 
the international arrivals building. Thus, although the international 
arrivals building is shared by all airlines, it is used predominately 
by airlines other than United. Moreover, the international arrivals 
building is not subleased by United. Instead, the building is 
controlled by MWAA and the federal agencies (the Immigration and 
Naturalization Service, the Customs Service, and the Department of 
Agriculture) that occupy the building. 

MWAA and United also agreed that United would (1) acquire, among other 
things, 12 passenger-screening checkpoints at Dulles and offices, 
storage, and other rooms used by security personnel that operate the 
checkpoints and (2) relocate flight information monitors, pay lockers, 
and several advertisement displays in the vicinity of the new 
screening checkpoints. The checkpoints are located throughout the main 
terminal at Dulles and are used to screen all enplaning passengers, 
regardless of the airline they are using. During a tour of the 
airport, representatives of MWAA indicated that it was more convenient 
to allow United to contract for the work because the airline—as the 
principal party on the airlines’ security committee—was more familiar 
with what needed to be done. 

Finally, MWAA and United agreed that United would acquire an outbound 
baggage system for the east side of Dulles’s main terminal. The 
baggage-handling system routes bags through the airport for passengers 
embarking from the east side of Dulles’s main terminal. United and its 
affiliated airlines are located in this area and, as a result, 
primarily benefit from the improvement. However, like the other 
projects, the baggage-handling system is a fixed improvement that is 
located within space controlled by MWAA and, should there be any 
change in airline tenants, the new tenants would benefit from the 
improvement. During a tour of the airport, MWAA representatives 
indicated that MWAA had intended to install the baggage-handling 
system. However, United wanted a higher-capacity system than MWAA had 
planned to install so, according to the officials, it was more 
convenient to allow United to contract for the work. In addition to 
convenience, the amendment to the airline’s use and lease agreement 
indicated that using United to perform the work would allow the 
expansion of the east side of the main terminal to “be completed 
earlier than it otherwise would be.” 

According to MWAA’s June 29, 2001, letter to us, using airlines to 
make airport improvements is a common practice among airport 
operators. MWAA explained that the practice derives from the highly 
competitive environment of the aviation industry that necessitates 
that airport operators be responsive to, among other things, the needs 
of their tenant airlines. Thus, according to MWAA, airport operators 
need flexibility to be able to authorize their tenant airlines to make 
airport improvements that affect the airlines’ operational needs. MWAA 
noted that it often considers it expeditious and prudent to allow 
airlines to make such improvements. Moreover, according to MWAA, this 
flexibility better ensures timeliness, compatibility, and cost-
effective decision-making. Finally, MWAA indicated that Congress 
intended MWAA to have flexibility in developing the airports when it 
authorized the airports’ lease to an independent entity. As discussed 
in the next section of this report, we largely disagree with MWAA’s 
view. 

In addition to the 3 airline sole-source awards, 2 of the 22 contracts 
that we reviewed were not approved by MWAA’s board of directors as 
required under the statutory lease provision and MWAA’s internal 
procedures. The sole-source awards were for telephone services and 
parking system upgrades that appeared appropriate under the contracts’ 
circumstances. MWAA agreed that the necessary board approvals were not 
obtained and indicated that the requirement had been overlooked. 

MWAA Believes That the Principles of Full and Open Competition Need to 
Be Defined within the Context of Airport Contracting: 

While not conceding that the examples cited in this report represent a 
violation of “any law or its federal lease,” MWAA indicated in its 
June 29, 2001, letter to us, that it needed to better embrace and 
articulate “certain hallmarks of ‘full and open’ competition.” MWAA 
stated, however, that our assessment of its contracting practices 
using recognized principles of full and open competition was 
inappropriate because, in its view, these principles do not adequately 
reflect the unique environment applicable to contracting at commercial 
airports. MWAA noted that its charter, as reflected in statutes of the 
District of Columbia and the Commonwealth of Virginia, recognized the 
need for flexibility in MWAA’s contracting and, consequently, granted 
it expanded commercial discretion in making and entering into 
contracts.[Footnote 32] In MWAA’s view, it has the power to use 
contracting practices and procedures that are based upon business 
needs and “not inherently linked to federal concepts” for maximizing 
competition. MWAA’s June 29, 2001, letter further explained that, as a 
self-supporting enterprise, MWAA is obligated to ensure its financial 
continuity rather than simply looking at “short-term least cost 
alternatives.” MWAA stressed that it would be wrong and inconsistent 
with Congress’s intent in transferring the operation of the airports 
to eliminate the flexible framework for contracting at the airports. 
According to MWAA, the revised contracting procedures that it intends 
to publish will eliminate the concerns we identified in this report. 
Finally, MWAA indicated that its revised policies and procedures 
should put an end to any lingering misconception about what “full and 
open competition” is in an airport setting. 

We understand that Congress, in transferring control of the airports, 
intended that the airports be operated in a more businesslike manner 
than had been possible when the federal government operated the 
airports.[Footnote 33] We also understand that MWAA’s charter provided 
MWAA with flexibility and discretion to make and enter into contracts. 
Nevertheless, such flexibility and discretion are subordinate to the 
obligations MWAA assumed under the statutory lease provision. MWAA 
accepted the conditions imposed on its contracting when it signed its 
lease with the federal government. As a result, MWAA-—unlike other 
airport operators--is subject to the statutory lease provision for 
full and open competition, to the maximum extent practicable. While 
Congress provided MWAA with the flexibility to permit exceptions to 
the use of full and open competition when authorized by a vote of 
seven members of MWAA’s board of directors, the board did not approve 
exceptions for any of the contracting actions that we questioned. 

We also do not agree with other views expressed in MWAA’s June 29, 
2001, letter to us. Regarding the meaning of full and open competition 
as used in the statutory lease provision, we note that the imposition 
of the requirement for MWAA to use full and open competition followed 
a long history of development of the fundamental principles applicable 
to competitive contracting for public entities in this country. Many 
of the authorities on which we relied on to identify the principles 
applicable to MWAA predate current federal procurement statutes and 
regulations. Thus, as discussed in appendix I, we applied those 
generally recognized principles that underlie any requirement for full 
and open competition by public entities such as MWAA.[Footnote 34] 

Finally, we do not agree that the fundamental principles are 
inapplicable to contracting in an airport environment. Federal, state, 
and local governments as well as other public entities conduct 
thousands of competitive procurements annually, expending billions of 
dollars. Collectively, these procurements have been used to build and 
maintain the public infrastructure in this country. On the basis of 
our knowledge of Reagan National and Dulles airports, MWAA’s 
procurements appear to be no more complex or challenging than many of 
these procurements. As a result, MWAA’s intention to reflect its view 
of the meaning of full and open competition in an airport setting 
through a revision of its contracting policies and procedures will not 
resolve the contracting concerns that we identified. 

The Department of Transportation Represents the Interests of the United 
States in Its Dealings with MWAA: 

The secretary of transportation’s responsibilities with respect to the 
lease are to (1) ensure that the airports are used for their intended 
purposes, (2) periodically renegotiate the amount of MWAA’s annual 
payments to the federal government that is attributable to inflation, 
and (3) negotiate any extensions beyond the 50-year period specified 
in the lease. The 1986 act that transferred operating responsibility 
to MWAA does not define the specific role of the department with 
respect to overseeing MWAA’s compliance with the contracting 
requirements in its lease with the federal government. Nevertheless, 
as signatory to MWAA’s lease with the federal government, department 
officials agreed that the secretary of transportation is the primary 
executive branch official responsible for representing the interests 
of the United States in its dealings with its tenant, MWAA. 
Accordingly, we discussed our findings with Department of 
Transportation officials. The officials suggested that MWAA publish a 
draft of its revised contracting procedures for the review and comment 
of all interested parties and indicated that, on the basis of the 
information in our draft report, corrective actions by MWAA are likely 
to be needed. According to the officials, the department will take 
“appropriate actions,” as necessary, to fulfill its obligations under 
the lease. However, noting that the 1986 act does not define the 
specific role of the department with respect to overseeing MWAA’s 
contracting, the officials did not identify the actions that the 
department would take to ensure that MWAA complies with its 
contracting obligations under the lease. 

Conclusions: 

In a number of important respects, MWAA’s procurement practices are 
not in compliance with its obligations under its lease with the 
federal government. As a result, for many of the contracts that we 
reviewed, MWAA may not have realized the important benefits that full 
and open competition is intended to achieve. Moreover, because MWAA 
permits several of the contracting practices that we questioned as a 
matter of policy or practice, we believe that similar problems are 
likely to exist in MWAA’s other contracts. 

MWAA’s failure to publish the competitive procedures it actually uses 
to award its contracts and concession franchises is inconsistent with 
the objective of fostering, to the maximum extent practicable, full 
and open competition. Moreover, its continued reliance on incomplete 
and outdated guidance to satisfy its requirement for “published 
procedures” disregards the requirements imposed in MWAA’s lease with 
the federal government. Weaknesses in MWAA’s evaluations of contractor 
proposals also raise concern about whether contractors have been 
treated fairly in competing for MWAA’s contract awards. Likewise, 
MWAA’s (1) practice of improperly exercising contract options that 
MWAA did not compete as part of its initial solicitation, (2) use of 
existing contracts to obtain goods and services that are beyond the 
scope of work contained in its contract solicitations, and (3) 
improper use of sole-source awards fail to ensure that MWAA obtains 
the best value available in the marketplace for the goods and services 
it purchases and could result in MWAA’s paying higher prices than 
necessary. MWAA’s contracting practices also deprive prospective 
contractors of the opportunity to compete fully and openly for all 
available contracting opportunities and, related to this, could create 
the perception of favoritism in MWAA’s contracting process. Finally, 
although the lease provides MWAA’s board of directors with the 
flexibility to authorize exceptions to the use of less than full and 
open competition, MWAA often did not seek the board’s approval for the 
contracting actions that we questioned. 

Given MWAA’s silence on most of our recommendations and its 
fundamental disagreement with our view about the meaning and 
applicability of the requirement for full and open competition, it 
appears doubtful that MWAA will, on its own initiative, take all of 
the actions that we believe are needed to meet the statutory and lease 
requirement pertaining to MWAA’s contracting practices. This is 
particularly troublesome given that MWAA recently embarked upon a 
multibillion-dollar construction program at Dulles. Furthermore, 
because the 1986 act does not specify the Department of Transportation’
s role in overseeing MWAA’s contracting, it is unclear what the 
department will do to ensure that MWAA satisfies its obligations under 
the lease. Accordingly, we added a suggestion that Congress consider 
clarifying the 1986 act to specify that, as lessor, the department is 
responsible for ensuring that MWAA (1) fully complies with the 
contracting requirements imposed in the lease and (2) takes all steps 
needed to correct the problems that we identified. 

Recommendations for Executive Action: 

To help ensure that MWAA’s future contracting activities comply with 
the requirements imposed in MWAA’s lease with the federal government, 
we recommend that the board of directors take steps to ensure that 

1. MWAA publishes, for review and comment by the public, procedures 
for competitively awarding contracts in excess of $200,000 and all of 
its contracts for concession franchises and thereafter that MWAA 
publishes—-and makes readily available to the public-—a complete, 
adequate, and current set of its contracting procedures; 

2. MWAA’s published procedures provide for, among other things, 

* evaluating all future contractor proposals in accordance with the 
factors and processes specified in its solicitations; 

* obtaining and evaluating prices for the entirety of its known or 
anticipated need for each procurement before selecting a successful 
contractor; 

* ensuring that contract modifications for additional goods and 
services are within the scope of work that MWAA solicited and competed; 

* ensuring that all work (i.e., work where the total contract value is 
estimated to exceed $200,000) is subject to full and open competition, 
to the maximum extent practicable, including all work ordered through 
the exercise of options or through other contract modifications; 

* ensuring that any work (i.e., work whose total contract value is 
estimated to exceed $200,000) that is awarded using less than full and 
open competition is adequately justified and approved by MWAA’s board 
of directors, as appropriate; and; 

3. MWAA updates its published contracting procedures regularly and 
that MWAA consistently follows the published procedures. 

In addition, we recommend that the board reevaluate MWAA’s use of 
preestablished thresholds to exclude contractor proposals from award 
consideration. Finally, to help ensure that the board is well-
informed, we recommend that the board require periodic reports on (1) 
MWAA’s actions to address our audit findings and (2) the extent of 
MWAA’s use of less than full and open competition. 

As signatory to MWAA’s lease with the federal government, we recommend 
that the secretary of transportation take appropriate actions to 
follow up on MWAA’s actions to address our findings and 
recommendations. 

Matter for Congressional Consideration: 

To help ensure that MWAA satisfies its obligations under the lease, we 
suggest that Congress consider clarifying the 1986 act to specify 
that, as lessor, the Department of Transportation is responsible for 
ensuring that MWAA (1) fully complies with the contracting 
requirements imposed in the lease and (2) takes all steps needed to 
correct the problems that we identified. 

Authority Comments and Our Evaluation: 

We discussed our preliminary findings with MWAA officials, including 
the vice president and general counsel and the vice president for 
business administration on June 22, 2001. By letters dated June 29, 
2001, and July 9, 2001, these officials provided additional 
information for us to consider in drafting our report. After a 
thorough analysis of the letters and extensive follow-up, we 
incorporated MWAA’s comments as appropriate. On October 9, 2001, we 
provided a draft of this report for review and comment to the 
Department of Transportation and MWAA. The department did not comment 
on the specific steps that it plans to take to address our 
recommendation that it follow up on MWAA’s actions to address our 
findings and recommendations. However, the department indicated that 
it would take “appropriate actions” to fulfill its obligations under 
the lease. The department also provided technical and clarifying 
comments, which we incorporated as appropriate. 

In their January 4, 2002, letter to us, MWAA’s board of directors 
disagreed with the report’s major conclusions, raised concerns about 
our scope and methodology, and reiterated comments made in MWAA’s 
previous letters. Furthermore, MWAA commented on some, but not all, of 
our recommendations. MWAA’s comments on our conclusions, scope and 
methodology, and recommendations and our evaluation of these comments 
are discussed below. MWAA’s January 4, 2002, letter and our 
supplementary comments on it appear in appendix IV. 

First, referring to its 1993 contracting manual, MWAA disagreed with 
our conclusion that it is not in compliance with its obligation to 
publish competitive procurement procedures. MWAA noted that the manual 
was adopted and published and that the 1993 manual is available to the 
public. MWAA also noted that all of its solicitation documents contain 
procurement-specific procedures. Thus, according to MWAA, the manual—-
considered either individually or in conjunction with the procedures 
it specifies in its solicitations-—satisfies its obligation under the 
lease. We disagree with MWAA’s view. The requirement to publish 
“procedures” specifically conveys Congress’s intent that MWAA develop, 
publish, and follow routinized, orderly, and established processes for 
conducting all of its procurements. MWAA’s 1993 contracting manual (1) 
does not adequately explain MWAA’s contracting practices, (2) is 
outdated, and (3) is not actually used to award MWAA’s contracts and 
concession franchises. Thus, in our opinion, the manual cannot be 
construed as meeting the intent of the statutory lease provision. 
Likewise, we do not believe that the procedures MWAA specifies in its 
solicitations can be viewed in conjunction with MWAA’s manual as 
satisfying MWAA’s obligation under the lease because the procedures 
are applicable only to individual procurements. Furthermore, on the 
basis of our findings on the contracts that we examined, MWAA’s 
procurement-specific procedures appear to promote ad hoc and arbitrary 
contracting actions.[Footnote 35] Notwithstanding our differences in 
views, MWAA agreed with our recommendation to publish its contracting 
procedures for review and comment by the public and, thereafter, to 
make the procedures readily available. According to MWAA, it is 
currently revising the 1993 contracting manual to, among other things, 
incorporate the more detailed, internal guidance it developed in 1998. 
MWAA further indicated that, after consideration of any comments 
received, it would make the revised manual available on request and 
through its Web site. 

Second, MWAA disagreed with our conclusion that it did not always 
satisfy its obligation to obtain, to the maximum extent practicable, 
full and open competition, on 15 of the 35 contracts that we reviewed. 
MWAA further disagreed with our belief that a similar conclusion could 
probably be reached about MWAA’s other contracts for goods and 
services. MWAA commented that it “is committed to maximizing 
competition in its procurement process consistent with reasonable 
business practices” applicable to airports and, related to this, that 
its data on contracting demonstrate that MWAA obtains full and open 
competition “where required.” We disagree with MWAA’s views. MWAA’s 
data on contracting for supplies and services, including construction, 
are derived from a database maintained by MWAA’s Procurement and 
Contracts Department. This database cannot be used to quantify the 
extent of MWAA’s use of full and open competition on its contracts 
between 1992 and 1999—the time frame that we reviewed. In part, this 
is because MWAA did not begin identifying the form of award—full and 
open competition, limited competition, or sole-source award—on its 
contracts for supplies and services until mid-1997. Furthermore, our 
limited tests to evaluate the integrity and reliability of the 
database disclosed numerous errors.[Footnote 36] Most important, to 
the extent that the database is accurate about the form of award for 
MWAA’s initial awards for these types of contracts, MWAA does not 
update the database to reflect any modifications it makes or options 
it exercises on a sole-source basis to its initial awards. Finally, as 
discussed elsewhere, the database does not include information about 
MWAA’s concession contracts. 

Furthermore, regarding our conclusion that MWAA did not always obtain, 
to the maximum extent practicable, full and open competition, MWAA 
commented that, in its view, we employed a faulty methodology for 
selecting contracts for review. Specifically, MWAA indicated that we 
did not employ a statistically valid sampling approach, failed to 
consider the full range of MWAA’s contracts, “preselected” only the 
most complex of its procurements, and “purposefully skewed” our 
contract selections “to include only those contracts with [the] 
highest growth.” As a result, MWAA indicated that our methodological 
approach did not comply with generally accepted government auditing 
standards. We disagree. As the office responsible for developing these 
standards, we make every effort to ensure that each of our reviews is, 
among other things, designed, implemented, and reported in conformance 
with applicable standards. Consistent with these standards, we also 
routinely disclose any limitations applicable to our findings. Thus, 
because we did not conduct a statistical sample of MWAA’s contracts, 
this report clearly indicates that our results cannot be projected to 
the universe of MWAA’s contracts. Nevertheless, because MWAA permits—-
as a matter of policy—-several of the contracting practices that we 
found objectionable, we continue to believe that similar problems are 
likely among MWAA’s other contracts. 

We also disagree that our methodology for selecting contracts was 
deficient. Contrary to MWAA’s assertion, generally accepted government 
auditing standards do not require the use of any particular 
methodological approach, including random sampling. A fundamental 
consideration in designing any audit is to ensure that the time and 
resources needed to carry out the review are commensurate with 
achieving the assignment’s specific objectives. Thus, while we 
considered a random sample of all of MWAA’s contracts, we did not 
adopt that approach for two reasons. First, only contracts exceeding 
$200,000 are subject to MWAA’s requirement for full and open 
competition. Second, randomly sampling the 646 contracts that exceeded 
$200,000 would have taken substantially more time and resources than 
we had available to accomplish the detailed contract reviews that we 
intended to perform. Instead, as discussed in appendix III, we 
designed a systematic and replicable method for selecting contracts. 
MWAA’s inference that this approach resulted in the arbitrary 
selection of its most complex and problematic contracts, including 
contracts with multiyear options and modifications, is not true. 
First, as discussed in appendix III and elsewhere, we examined the 
entire universe of contracts identified in MWAA’s database as awarded 
in 1998 and 1999 using less than full and open competition. Thus, 22 
of the 35 contracts that we reviewed were in no way “preselected.” 
Furthermore, far from being arbitrary, our approach for selecting the 
13 remaining contracts that we reviewed was specifically designed to 
be free from any selection bias and, thus, our approach is completely 
replicable by any outside auditor. Our approach for selecting the 13 
contracts also resulted in a good cross-section of both the value 
(above and below $1 million) and type of contracts (construction-
related contracts, non-construction-related services contracts, and 
contracts for supplies) that MWAA identified as initially awarded 
using full and open competition. Moreover, even though most of the 13 
contracts that we selected involved multiyear option periods and all 
of the contracts were modified, the 13 contracts were no more complex 
than others in MWAA’s contracting database. In this regard, for 
example, it should be noted that about 79 percent of the 646 contracts 
exceeding $200,000 between 1992 and 1999 were modified at least once. 

Likewise, MWAA’s suggestion that we purposely “skewed” our 13 contract 
selections toward those with high cost growth because we suspected 
that they would be particularly problematic is also incorrect. As 
discussed in this report, we focused our contract selections on 
contracts with a high percentage of cost growth solely to determine if 
the work associated with the contracts’ cost growth had also been 
subject to full and open competition. Moreover, in contrast to MWAA’s 
view, given the average amount of the contracts’ cost growth-—about 
617 percent—-one could easily argue that the contracts should have 
been subject to continuous management scrutiny and, thus, expect that 
the contracts would be relatively free of problems. Finally, we 
discussed all aspects of our planned methodology with MWAA officials, 
including the manager of MWAA’s Procurement and Contracts Department, 
before selecting contracts for review. At that time, MWAA officials 
did not voice any concerns about our planned approach and, in fact, 
considered it more complex than necessary because, according to the 
manager, each of MWAA’s contracts would likely be found beyond 
reproach. 

Third, MWAA reiterated its view that our assessment of its contracting 
practices using recognized principles of full and open competition was 
inappropriate because it is not a federal agency and, consequently, is 
not obligated to follow federal procurement statutes and regulations. 
MWAA also reiterated that the criteria we applied do not adequately 
reflect the “unique environment” applicable to contracting at 
commercial airports. 

Related to this, MWAA commented that the requirement to obtain, to the 
maximum extent practicable, full and open competition is broadly 
stated by design and that Congress intended to provide MWAA with 
flexibility to operate the airports in a manner consistent with the 
operation of other commercial airports. We disagree with MWAA’s view. 
Our report clearly notes that MWAA is not obligated to follow federal 
procurement statutes and regulations. Thus, while the precepts of “
full and open competition” owe much to the federal government’s 
experience, we did not use federal procurement statutes or 
requirements to assess MWAA’s compliance with the statutory lease 
provision. Instead, as detailed in appendix I, we applied generally 
recognized principles underlying the concept of full and open 
competition. In addition, we clearly acknowledge that Congress, in 
transferring control of the airports, intended the airports to be run 
in a more businesslike manner than was possible when the federal 
government operated the airports. Congress also intended to leverage 
the ability of an independent, nonfederal, public entity to obtain 
funding in private money markets for use in financing the airports’ 
renovation and operation. The fact that Congress sought such a 
benefit, however, does not provide MWAA with a basis for not adhering 
to the conditions imposed upon MWAA’s contracting. Finally, although 
the board of directors’ letter to us emphasized the need for “
flexibility” in MWAA’s contracting, the letter did not discuss the 
specific mechanism that Congress provided for achieving flexibility in 
MWAA’s contracting. As explicitly discussed in this report, the 
statutory lease provision permits exceptions to the use of full and 
open competition when approved by a vote of seven members of MWAA’s 
board of directors. None of the contracting actions that we found 
objectionable were approved by MWAA’s board. 

Finally, implying that our 1993 report endorsed its contracting 
procedures and practices, MWAA questioned what it described as “the 
foundation for such a fundamental change” in our views. According to 
MWAA, our 1993 report “concluded that the Authority’s approach and 
understandings [regarding the meaning and applicability of the 
requirement for full and open competition] were acceptable to develop 
policies, implement recommendations and execute a successful 
procurement system.” Thus, absent additional audits, guidance, or 
monitoring in the interim, MWAA indicated that it had relied on our 
earlier report to conduct its procurements. We disagree with MWAA’s 
characterization of the conclusions in our earlier report and, related 
to this, note that MWAA has misrepresented our 1993 report in various 
court proceedings.[Footnote 37] Our 1993 report concluded that, even 
though MWAA had not yet published detailed procedures for awarding its 
contracts and concession franchises, the contracting practices that we 
reviewed in the early years of MWAA’s contracting program-—1989 to 
1991—-generally promoted a competitive environment. However, we also 
concluded that, if not corrected, certain practices we identified 
could adversely affect MWAA’s competitive process in the future. The 
problems that we identified in our 1993 report are similar to those 
identified in this report and included awarding contracts under 
procedures that were not publicly disclosed and extending one sole-
source contract on several occasions without proper authorization. 
Thus, in contrast to MWAA’s view, these and other problems appear to 
have been simply exacerbated in the years between our audits. 

Furthermore, regarding MWAA’s claim that it had no previous knowledge 
of the problems that we identified, we must note that, in 1998, MWAA’s 
Office of Audit identified problems similar to the ones that we found. 
The audit focused on 34 professional services contracts and found that 
MWAA’s use of options and other contract modifications deprived 
contractors of opportunities that could otherwise have been competed. 
The audit also identified, as we have reported, the use of 
modifications to add out-of-scope work to contracts. Furthermore, the 
audit found that required board approvals had not always been 
obtained. The office recommended that MWAA increase its oversight of 
its contracts to, among other things, identify work that should be 
offered as separate procurements. 

We also disagree that we changed the rules applicable to MWAA’s 
contracting for the purpose of this audit. Both our 1993 report and 
this report clearly state that MWAA is not obligated to follow federal 
procurement statutes and regulations related to full and open 
competition. However, as discussed throughout this report, this does 
not mean that MWAA is free to define the requirement for full and open 
competition as it sees fit. MWAA is not a private entity with 
authority to operate freely in the commercial world. Rather, MWAA is a 
public entity subject to the contracting requirement for full and open 
competition, to the maximum extent practicable, that was set forth in 
its lease with the federal government. Thus, while MWAA need not 
follow federal procurement statutes and regulations, it must comply 
with the fundamental principles underlying full and open competition. 
To help avoid future confusion on this point, appendix I provides 
additional guidance about these principles. 

As previously discussed, MWAA agreed to publish its contracting 
procedures for review and comment by the public and, thereafter, to 
make the procedures readily available. MWAA also indicated that it 
would “consider its approach” to pricing contract options when it 
revises its contracting procedures. However, MWAA did not specifically 
comment on our other recommendations, which were aimed at correcting 
the other contracting problems that we identified. Likewise, MWAA did 
not commit to regularly update and consistently follow the revised 
procedures that it intends to publish. Finally, MWAA did not comment 
on our recommendation that the board (1) reevaluate MWAA’s use of 
preestablished thresholds to exclude contractor proposals from award 
consideration and (2) require periodic reports on, among other things, 
MWAA’s actions to address our audit findings. 

Given MWAA’s silence on most of our recommendations and its 
fundamental disagreement with our view about the meaning and 
applicability of the requirement for full and open competition, it 
appears doubtful that MWAA will, on its own initiative, take all of 
the actions that we believe are needed to meet the statutory and lease 
requirement pertaining to MWAA’s contracting practices. This is 
particularly troublesome given that MWAA recently embarked upon a 
multibillion-dollar construction program at Dulles. Furthermore, 
because the 1986 act does not specify the Department of 
Transportation’s role in overseeing MWAA’s contracting, it is unclear 
what the department will do to ensure that MWAA satisfies its 
obligations under the lease. Accordingly, we added a suggestion that 
Congress consider clarifying the 1986 act to specify that, as lessor, 
the department is responsible for ensuring that MWAA (1) fully 
complies with the contracting requirements imposed in the lease and 
(2) takes all steps needed to correct the problems that we identified. 

We performed our work from November 2000 through January 2002 in 
accordance with generally accepted government auditing standards. A 
detailed description of our scope and methodology, including our 
methodology for selecting contracts, appears in appendixes II and III. 

We are sending copies of this report to the secretary of 
transportation, the chief executive officer of MWAA, and each member 
of MWAA’s board of directors. Copies will also be made available to 
others upon request. 

Major contributors to this report were Alan Belkin; David Bryant, Jr.; 
Arthur James, Jr.; Bert Japikse; Larry Turman; and Kathleen Turner. If 
you or your staff have any questions about this report, please contact 
me on (202) 512-8387 or at ungarb@gao.gov. 

Signed by: 

Bernard L. Ungar: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Principles of Full and Open Competition: 

As discussed in this report, Congress required that the Metropolitan 
Washington Airports Authority (MWAA) award certain contracts by 
obtaining, to the maximum extent practicable, full and open 
competition.[Footnote 38] This requirement embodies a number of 
fundamental principles that we discuss below. We have also provided 
information on the principles that apply to ordering goods and 
services under contracts that were awarded using full and open 
competition. 

Background Decisions of the comptroller general dating back to the 
1920s and 1930s employed the term “full and open competition” and used 
it interchangeably with the phrase “full and free competition.”
[Footnote 39] More recently, legislative reference to “full and open 
competition” appears in the Office of Federal Procurement Policy Act 
Amendments of 1979.[Footnote 40] That act declared it to be the policy 
of Congress to promote economy, efficiency, and effectiveness in the 
procurement of property and services by promoting the use of full and 
open competition by the government. Congress reiterated the policy in 
1983, again using the phrase “full and open competition.”[Footnote 41] 
The following year, Congress revamped the federal procurement statutes 
by enacting the Competition in Contracting Act of 1984, which also 
promoted full and open competition.[Footnote 42] At the same time, 

Congress amended the Office of Federal Procurement Policy Act to 
declare that “full and open competition, when used with respect to a 
procurement, means that all responsible sources are permitted to 
submit sealed bids or competitive proposals on the procurement.”
[Footnote 43] Two years later, upon consideration of the 1986 
Metropolitan Washington Airports Act (which provided for the lease of 
Dulles and Reagan National), a senator from Virginia introduced the 
requirement for full and open competition at the airports. He 
explained that the “amendment represents both good government and good 
management... It...is fully consistent with the efforts [of Congress] 
to guarantee the proper and prudent procurement of goods and services.”
[Footnote 44] 

Although the precepts of competitive public contracting owe much to 
the federal government’s experience, the fundamental principles 
outlined here are not unique to federal contracting practice. The 
principles find expression, for example, in the American Bar 
Association’s (ABA) Principles of Competition in Public Procurements 
[Footnote 45] as well as in the ABA’s Model Procurement Code for State 
and Local Governments, adopted in 1979 and updated in 2000.[Footnote 
46] Sixteen states, including Virginia, have adopted the model code. 
[Footnote 47] 

Fundamental Principles for Competitive Public Procurements: 

To achieve full and open competition, prospective contractors must be 
able to prepare and submit appropriate bids or proposals in response 
to an identified contract requirement. Moreover, bids or proposals 
must be judged solely on their merits. To help ensure that contract 
awards are not arbitrary or preferential and to protect the integrity 
of the competitive process, specific procedures must be written and 
followed.[Footnote 48] The following text explains the fundamental 
principles underlying full and open competition. 

• Contracting organizations must conduct procurements using a 
solicitation that clearly identifies the requirements to be met as 
well as the process that the organization intends to follow to select 
a contractor. The solicitation plays an essential role in defining an 
organization’s requirements and in establishing the framework for a 
competitive procurement. To accomplish its purpose, a solicitation 
must be sufficiently clear to permit the preparation and evaluation of 
bids or proposals on a common basis.[Footnote 49] 

* Contracting organizations must publish their solicitations in a 
manner that reasonably ensures that those who might be qualified to 
compete for a contract can learn of the solicitation and respond to 
it. To obtain full and open competition, a contracting organization 
must provide all responsible sources with the opportunity to compete 
for the award. This stipulation is achieved if the contracting 
organization makes a diligent, good faith effort to inform prospective 
contractors about a solicitation and allows the firms to obtain any 
supplementary information needed to submit a responsive bid or 
proposal in time for it to be considered.[Footnote 50] At a minimum, 
this requirement mandates some kind of public announcement of the 
contract’s availability. Additionally, the notice must adequately 
inform prospective contractors about (1) the nature of the procurement 
and (2) how to proceed with their offers if they want to compete for 
the contract.[Footnote 51] 

* Contracting organizations cannot impose restrictions that do not 
reasonably pertain to their needs. Contracting organizations need not 
accept products or services that do not meet their needs. On the other 
hand, they cannot impose unnecessary limitations that restrict the 
field of prospective contractors or the products or terms that 
contractors might offer to meet an organization’s needs. Thus, a 
specification requiring the use of a specific material, for example, 
unduly restricts competition if another, potentially cheaper, material 
would also meet the organization’s needs.[Footnote 52] 

* Contracting organizations must specify in their solicitations the 
factors that they intend to use to evaluate proposals. 

Prior to World War II, public contracts were generally awarded to the 
firm that submitted the lowest-priced responsive bid. The rules were 
simple. A firm had to meet the requirements of the solicitation at a 
fixed or determinable price and, thereafter, was awarded the contract 
if its price was the lowest. In the post-World War II period, however, 
public contracting has increasingly relied on negotiated procurements 
and “best value” selection techniques that emphasize both price and 
technical merit in selecting a successful firm. Competition cannot be 
considered full and open if prospective contractors, lacking 
sufficient information, base their proposals on different assumptions 
about how they will be evaluated and, consequently, tailor their 
proposals differently.[Footnote 53] Thus, if a contracting 
organization intends to use multiple evaluation criteria, it must 
provide prospective contractors with enough information to permit the 
firms to compete on an equal basis.[Footnote 54] We have long 
recognized, therefore, that the basic criteria to be followed in 
selecting contractors (and some characterization of their relative 
importance) must be disclosed in the solicitation.[Footnote 55] 
Moreover, the criteria listed in a solicitation cannot include 
irrelevant factors that could mislead potential offerors. 

* Contracting organizations must treat all firms equally. Full and 
open competition is achieved, in part, through fairness and equal 
treatment. Thus, a contracting organization must establish and follow 
common closing dates and processing procedures. Similarly, if a 
contracting organization provides information to one firm that could 
affect the preparation of its proposal, it must provide other 
prospective contractors with the same information. Likewise, if a 
contracting organization provides any firm with an opportunity to 
participate in negotiations or to modify its proposal, it must provide 
all firms in a similar circumstance—-that is, those in the competitive 
range-—with the same opportunity. 

* Contracting organizations must evaluate bids and proposals and award 
contracts using the criteria and process they specified in their 
solicitation. 

To maintain the integrity of the competitive process, contractors must 
be selected using the evaluation criteria and process specified in the 
solicitation.[Footnote 56] Moreover, if the contracting activity 
changes its evaluation criteria and/or process, it must inform 
prospective contractors and provide them with an opportunity to amend 
their proposals.[Footnote 57] 

* Contracting organizations must limit the scope of a competitively 
awarded contract to the work that they originally procured. 

To achieve full and open competition, an organization cannot add work 
to a contract that was not originally subject to competition. For 
example, if an organization solicits offers to furnish 1,000 items at 
a fixed unit price, it cannot later add another 1,000 items at the 
time of award—-even if the contractor consents to the change. Instead, 
since the organization knew at the time of award that its requirement 
was for 2,000 items, it must cancel the solicitation and reopen 
competition for the full 2,000 items using full and open competition. 
Likewise, an organization cannot award a contract with the intention 
of materially modifying it later. Thus, in the example given, the 
organization cannot award a contract for 1,000 items knowing that it 
will increase the quantity to 2,000 items after the award is made. 
[Footnote 58] 

Applicability of Principles to Existing Contracts: 

A requirement for full and open competition establishes a mandate that 
a contracting organization’s practices will comply with fundamental 
competitive principles for awarding contracts. A requirement to 
“obtain, to the maximum extent practicable, full and open competition” 
recognizes that there may be circumstances when it is not practicable 
to obtain full and open competition, because it would be futile or 
infeasible, but otherwise requires that full and open competition be 
obtained.[Footnote 59] This mandate applies to the award of all work 
performed under every contract.[Footnote 60] The following text 
explains the fundamental principles applicable to competitive public 
procurements. 

* The scope of a contract is determined by examining the binding 
promises that are made as well as the obligations assumed by the 
parties. From a contracting organization’s perspective, the scope of a 
contract is measured by its right to unilaterally obtain or order 
supplies and services under the contract. A unilateral right exists if 
all of the contract terms pertaining to the contract, including price, 
are determinable and agreed to by both parties.[Footnote 61] Contract 
language that does not create a determinable obligation creates little 
more than an agreement to negotiate additional items in the future. 
[Footnote 62] The need for binding obligations does not preclude the 
use of contract options or change order processes. Such practices are 
commonplace in the federal government’s procurements. Moreover, ABA’s 
model code recognizes the value of multiyear contracting in obtaining 
better terms on larger quantities that may be needed in the future. 
[Footnote 63] The model code also establishes a change process for 
contracts that, like the process used by the federal government, 
provides a method for determining price adjustments when changes 
occur.[Footnote 64] 

* The scope of permitted changes is limited to those changes that 
reasonably fall within the terms of the contract. The scope of a 
public contract, including the scope of modifications permitted under 
a changes clause, is limited to the acquisition of those goods and 
services that reasonably fall within the contract. The changes clause 
used in public contracts provides the contracting organization with 
(1) the ability to order changes during the administration of a 
contract and (2) a process for paying for changes ordered. However, to 
achieve full and open competition, the changes ordered may not exceed 
the scope of the original contract. Changes beyond the purview of 
those that would have been reasonably anticipated in carrying out the 
objectives of the original contract are outside the scope of the 
contract. Such changes cannot be ordered under the contract because 
the effect of doing so would be to add work that had not been subject 
to competition.[Footnote 65] 

* A requirement to obtain full and open competition does not permit 
the use of preplanned, noncompetitive, follow-on contracts or any 
extension or expansion of the scope of a contract that was not subject 
to competition. We have used the phrase “preplanned, noncompetitive, 
follow-on contract” to describe contracts that result from the 
purported exercise of unpriced and unevaluated options to obtain 
additional work.[Footnote 66] Such “options” are merely agreements to 
negotiate future follow-on contracts that, if exercised, constitute 
noncompetitive awards.[Footnote 67] 

[End of section] 

Appendix II: Scope and Methodology: 

To determine if MWAA has complied with its obligations under its lease 
with the federal government, we reviewed the requirements of the 1987 
lease and researched the legislative history of the Metropolitan 
Washington Airports Authority Act of 1986, as amended. As discussed in 
this report, the statute mandated that specific contracting 
requirements be included in MWAA’s lease with the federal government. 
To understand the intent of Congress in imposing these requirements, 
we researched the meaning of the terms used in the statutory lease 
provision within the context of the fundamental principles of 
competition in contracting.[Footnote 68] These principles are 
reflected in federal laws, such as the Competition in Contracting Act 
of 1984; federal regulations; and past decisions by the comptroller 
general; the American Bar Association’s (ABA) Principles of 
Competition in Public Procurements; as well as ABA’s Model Procurement 
Code for State and Local Governments, all of which we examined. 

Having determined the intent of Congress, we examined MWAA’s 
contracting actions to determine if the actions were consistent with 
obtaining full and open competition. Regarding MWAA’s obligation to 
award contracts for supplies and services exceeding $200,000 and all 
concession contracts through the use of published competitive 
procedures, for example, we examined MWAA’s notice announcing the 
publication of its 1993 contracting manual as well as the manual 
itself. We also searched MWAA’s contracting Web site, examined its 
contract solicitations, and held discussions with MWAA officials to 
determine how the 1993 manual has been made available to prospective 
contractors and other interested parties. In addition, we analyzed MWAA’
s 1998 contracting manual to determine how the internal procedures 
that MWAA actually uses to award its contracts for goods and services, 
including construction, compare with the procedures that MWAA 
published in 1993. With MWAA officials, we also discussed plans to 
update the 1993 and 1998 manuals and the status of MWAA’s actions to 
develop and publish detailed procedures for awarding its concession 
contracts. 

To determine if MWAA has obtained full and open competition, to the 
maximum extent practicable, for contracts estimated to exceed 
$200,000, we examined two distinct groups of contracts that either 
exceeded $200,000 on the date of award or that had exceeded $200,000 
as of December 31, 1999. As discussed in more detail in appendix III, 
the first group consisted of 13 contracts. We reviewed each of these 
contracts in detail to determine how MWAA solicited, awarded, and 
modified the contracts and compared these actions with MWAA’s 
contracting policies and procedures and to long-standing principles 
for obtaining full and open competition. In addition to the initial 
awards, we examined all 240 subsequent modifications to the 13 
contracts. The modifications changed the terms of the original 
contracts by, among other things, adding work to the contracts. 

The second group of contracts consisted of all 22 contracts that, 
according to MWAA’s database, exceeded $200,000 and that MWAA awarded 
in 1998 and 1999 without full and open competition. We reviewed these 
contracts to determine the purpose of each acquisition and to review 
documentation supporting the justification and approval of each of the 
contracts. We compared this information with MWAA’s requirements for 
awarding and approving contracts using less than full and open 
competition—-that is, awards that were based on limited competition 
and sole-source awards—-to determine if the procurements were 
appropriately approved and reasonably justified, given the particular 
circumstances of each procurement. 

We visited Ronald Reagan Washington National Airport and Washington 
Dulles International Airport to familiarize ourselves with work 
conducted under various contracts that we reviewed, including MWAA’s 
contract for installing supplemental communications systems at the 
airports and various contracts with the airlines for airport 
improvements. For projects undertaken by the airlines, we also 
examined MWAA’s use and lease agreements, which govern the airlines’ 
use and lease of airport premises. 

We coordinated our work with MWAA’s Office of Audit and reviewed 26 
audits issued between 1994 and 1999. Finally, because the secretary of 
transportation represents the interests of the executive branch in 
ensuring that MWAA complies with the requirements of the lease, we 
also discussed our findings with Department of Transportation 
officials. 

[End of section] 

Appendix III: Contract Selection Methodology: 

MWAA awarded 2,843 contracts for supplies and services, including 
construction, between January 1, 1992, and December 31, 1999, 
according to its contracting database.[Footnote 69] Another 17 
contracts were awarded before January 1, 1992, but were still active 
as of December 31, 1999, for a total of 2,860 contracts. We performed 
a limited analysis of the integrity and reliability of MWAA’s 
contracting database, including checks to (1) identify and eliminate 
duplicate contract entries and (2) identify and obtain missing 
information related to the estimated value, award amount, and the 
actual value of the contracts as of December 31, 1999. After duplicate 
contract entries were deleted and missing data were added, we 
considered the database suitable for use in selecting contracts for 
our detailed review. 

To determine whether MWAA’s contracts were awarded, to the maximum 
extent practicable, using full and open competition, we focused on 
contracts that either exceeded $200,000 when awarded or had exceeded 
$200,000 as of December 31, 1999. Of the 2,860 contracts, 646 met 
these criteria. We used the database to select two distinct groups of 
contracts from this universe. The first group consisted of 13 
contracts that generally (1) were awarded between 1992 and 1999 using 
full and open competition and (2) exhibited the highest cost growth. 
[Footnote 70] The second group included 22 contracts that, according 
to MWAA’s database, had been awarded either using limited competition 
or on a sole-source basis. In total, the 35 contracts that we examined 
were valued at about $408 million and represented 5 percent of the 646 
contracts awarded and 19 percent of the value of the 646 contracts as 
of December 31, 1999. 

To select the first group of contracts, we sorted the 646 contracts 
according to their value at award. After identifying and listing those 
contracts valued at $1 million or more and those valued at less than 
$1 million, we (1) calculated the percentage of increase between each 
contract’s initial award value and its value as of December 31, 1999, 
and (2) sorted the two groups of contracts from highest to lowest in 
terms of cost growth. For each of the two monetary stratifications—
contracts awarded for $1 million or more and contracts awarded for 
less than $1 million—-we chose (1) 2 construction-related contracts, 
(2) 2 contracts for non-construction-related services, and (3) 2 
contracts for supplies. These 12 contracts generally represented the 
largest percentage of increase in value as of December 31, 1999, 
compared with their initial amount.[Footnote 71] Finally, we added 1 
contract for insurance services, which had been awarded for less than 
$1 million, because we had already substantially examined it during 
our audit design work.[Footnote 72] In total, the 13 contracts had an 
initial award value of about $51 million and a value of about $368 
million as of December 31, 1999. 

To examine the appropriateness of MWAA’s justifications for using less 
than full and open competition and to determine if these contracts had 
received appropriate approvals, we used MWAA’s database to select a 
second group of contracts. Specifically, we chose all 22 contracts 
over $200,000 that the database identified as having been awarded 
using either limited competition or on a sole-source basis in 1998 and 
1999.[Footnote 73] We performed limited work to evaluate the integrity 
and reliability of these data, including checks to confirm that the 22 
contracts had, in fact, been awarded using less than full and open 
competition. These contracts, had an award value of about $35 million 
and a value of about $40 million as of December 31, 1999. 

Because MWAA does not have a centralized database of its concession 
contracts or documented procedures for awarding these contracts, we 
did not review concession contracts. Instead, we focused our review on 
MWAA’s contracts for supplies and services, including construction. The 
results of our contract analyses are not projectable to the universe 
of MWAA’s contracts for supplies and services.[Footnote 73] However, 
because MWAA permits several of the contracting practices that we 
questioned as a matter of policy or practice, similar problems are 
likely to exist in MWAA’s other contracts. 

[End of section] 

Appendix IV: Comments from the Metropolitan Washington Airports 
Authority: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

Metropolitan Washington Airports Authority: 
1 Aviation Circle: 
Washington, DC 20001-6000: 
[hyperlink, http://www.mwaa.com] 

January 4, 2002: 

Mr. Bernard L. Ungar: 
Director, Physical Infrastructure Issues: 
United States General Accounting Office: 
441 G Street, N.W. 
Washington, DC 20548: 

RE: GAO Draft Report No. 02-36: 

Dear Mr. Ungar: 

The Board of Directors of the Metropolitan Washington Airports 
Authority ("Authority") has reviewed Draft Audit Report No. 02-36 
("Draft Report") prepared by the General Accounting Office ("GAO"). 
The Authority respectfully disagrees with the major conclusions 
because: 

1. The Authority has satisfied its requirement to obtain full and open 
competition, when required. The Authority's procurement system is 
based on competition and was used to award 2,843 contracts between 
January 1, 1992 and December 31, 1999 using competition, when 
required. The Draft Report is based on a review of 35 contracts. Of 
these 35 contracts, competition in the selection process was conducted 
for the original scope of work, where required, in all but three 
instances. These three contracts were awarded to airline tenants to make
improvements at the airports. The Authority believes that the
nature of the aviation industry makes the use of additional 
competitive procedures for these types of awards impracticable. [See 
comment 1] 

Consequently, the conclusions of the Draft Report inappropriately draw 
the inference that there is an absence of the use of competition in 
the overall procurement system when data for the procurement system 
and findings of the Draft Report on the 35 contracts reveal that the 
Airports Authority uses competition, where required. 

2. The Draft Report uses an inappropriate sampling methodology. The 
sample selection criteria should yield a sample that is representative 
of the universe of contracts in the Authority's overall procurement 
system. Instead, the auditors preselected the Authority's most complex 
procurements involving limited competition, multiyear options and 
modifications. The conclusions in the Draft Report are questionable 
because the preselection precludes the use of an analytical technique 
that is applicable to the entire procurement system. 

3. The Draft Report neglects the significant fact that the Authority 
has relied upon a 1993 GAO Report, which concluded that the 
Authority's approach and understandings were acceptable to develop 
policies, implement recommendations and execute a successful 
procurement system for the last seven years. (See General Accounting 
Office Report 93-63, Contract Award Practices, Metropolitan Washington 
Airports Authority Generally Observes Competitive Principles at page 
2, Feb. 1993). 

The Authority provides its response in three parts: 1) Audit 
Methodology; 2) General Comments; and 3) Specific Comments. Each is 
addressed below. 

I. The Authority questions the GAO Audit Methodology: 

The Authority believes that the audit methodology, as described by the 
Draft Report, does not meet the statutory requirements imposed upon 
GAO by the Metropolitan Washington Airports Act of 1986 and does not 
comply with generally accepted governmental auditing standards. See 49 
U.S.C. § 49104(a)(7) (GAO audits must be conducted "in accordance with 
generally accepted management principles"). The audit methodology 
departs from generally accepted governmental auditing standards. A 
performance audit must be a systematic examination of evidence for the 
purpose of providing an independent assessment of a function or 
activity. This standard cannot be achieved when the selection process 
is purposefully skewed to include only those contracts with highest 
growth (Group B). [See comment 2] The Draft Report is based on only 35 
contracts preselected by the auditors as potentially problematic 
procurements, out of a total universe of 2,843 contracts for goods or 
services. See Draft Report at page 47. [Now on p. 57] Indeed, the 
Draft Report acknowledges that the contracts examined "were not 
selected on the basis of a statistically valid sampling approach ...." 
Draft Report at page 15 (emphasis added). [Now on p. 18] 

Because of this methodology, the specific observations set forth in 
the Draft Report are, in the Draft Report's own words: "not projectable 
to the universe of the Authority's contracts for goods and services." 
See Draft Report at page 4 and note 4 and page 49 (emphasis 
added).[Footnote 1] Now on pp.4, including footnote 4; 6; and 59. 

Nevertheless, the Draft Report speculates that "similar problems are 
likely to exist in the Authority's other contracts," and thus, that in 
large part, the Authority has violated the Lease. Id. at pages 4 and 
49. [Now on pp. 6 and 59] This conclusion is an abrupt departure from 
the prior audit and the follow-up actions taken by the Authority in 
response to the initial 1993 audit. 

The Authority questions the foundation for such a fundamental change 
in light of the absence in the last seven years of any intervening 
audits, monitoring, or pattern of complaints relating to the 
Authority's programs. Consequently, the Authority strongly believes 
that the standards and policies articulated in its published 
competitive procedures are consistent with applicable statutes, the 
lease with the federal government, and prior guidance provided by the 
GAO and relied upon by the Airports Authority. The success of the 
Airports Authority's programs over the last seven years is the best 
evidence of the implementation of a sound procurement system. 

II. General Comments: 

First, with respect to the legal "yardstick" to be applied to the 
Authority, the Draft Report is inconsistent with the only other GAO 
guidance provided to the Authority on the issue. The current Draft 
Report consistently looks to procurement law applicable to an 
"agency." But, 

* the Authority is not an "agency," 

* the Authority is not subject to federal government contract statutes 
and regulations, and, 

* the Authority is explicitly exempt from the procurement law of the 
Commonwealth of Virginia and the District of Columbia. [See comment 3] 

Indeed, as the GAO observed in 1993: 

Since the airports are no longer under the control of the federal 
government, [the Authority] is not required to follow federal 
procurement statutes, such as the Competition in Contracting Act and 
the Brooks Act, or the Federal Acquisition Regulations (FAR) in 
procuring goods and services. As a result, [the Authority] has 
developed its own procurement policies and procedures, which 
incorporate some federal procurement terms and principles. [The 
Authority] applies these terms and principles differently. (General 
Accounting Office Report 93-63, Contract Award Practices, Metropolitan 
Washington Airports Authority Generally Observes Competitive 
Principles at page 2, Feb. 1993). 

Second, with respect to the Draft Report's factual and legal 
conclusions, the Draft Report largely ignores, or quotes out of 
context, the Authority's detailed comments on an earlier draft report. 
[See comment 4] A copy of the Authority's June 29, 2001, and July 9, 
2001, comments are provided as Attachments 1 and 2. [See comment 5] 

Third, the Authority specifically requests that the final report 
clearly note that it does not apply to the Authority's concession 
contracts. See Draft Report at pages 4 and 48. [See comment 6] [Now on 
pp. 4 and 58] 

Fourth, the tone of the draft report is unduly harsh. The title and 
numerous subtitles and headings within the report overstate and 
extrapolate the findings to reach a largely judgmental conclusion 
about the Authority's procurement system and attempts to lead the 
reading audience, particularly those in the contracting community, to, 
in our view, unfounded conclusions about the Authority's procurement 
practices. Indeed, it prejudices the Authority in its dealings with 
the contracting community. [See comment 7] 

III. Specific Comments: 

The Authority provides the following additional specific comments on 
the Draft Report. 

The Authority agrees with some of the observations in the Draft Report
The Authority generally agrees with the following observations in the 
Draft Report. 

1. "Congress generally intended the airports to be operated as a 
business and in a manner similar to other airports" Draft Report at 
page 2. 

2. "Congress provided the Authority with considerable discretion in 
structuring its procurement process." Draft Report at page 2. 

3. "The Authority is not required to follow federal procurement 
statues and regulations...." Draft Report at page 2. 

4. The Authority, pursuant to the Lease, "shall obtain, to the maximum 
extent practicable, full and open competition through the use of 
published competitive procedures. By a vote of seven members, the 
Authority may grant exceptions" to this requirement. Draft Report at 
page 2 and Lease 11.D. 

5. The Audit Report does not cover and is not applicable to concession 
contracts. Draft Report at page 4. 

6. The results of the auditors' analysis of the 35 contracts "are not 
projectable to the universe of the Authority's contracts for goods and 
services." Draft Report at page 4. 

The Authority's purpose and objective: 

The Authority's purpose is to plan, provide, and actively manage world-
class access to the global aviation system in a way that anticipates 
and serves the needs of the National Capital area. The Authority is 
attentive to the business needs of our airports; to our unique 
business arrangement with the federal government to operate the 
airports; and to our partners in the aviation industry, the airlines. 
Within this context, our effort has been to provide full and open 
competition to the maximum extent practicable through the use of 
published competitive procurement procedures. 

The Authority does have published competitive procedures: 

The Draft Report states that the intent of the Lease is that the 
Authority develop, publish, and follow "an orderly set of procedures 
for awarding its contracts and concession franchises." Draft Report at 
page 4. The Authority adopted and published its Contracting Policies 
and Procedures Manual in 1993. [See comment 8] A copy was made 
available to GAO and DOT in 1994. This document is available to the 
public and was intended to fulfill the legislative and lease 
requirements for published competitive procurement procedures. In 
addition, all solicitations to purchase goods and services, to 
construct facilities and for concessions include published procedures 
in the solicitation document. Pursuant to the general provisions in 
the manual, the procurement-specific procedures can be challenged 
prior to contract award. Thus, the manual and the solicitations either 
individually or collectively satisfy the Lease requirement for 
published competitive procedures. The statements in the Draft Report 
to the contrary are made without factual or legal support. See Draft 
Report at page 9 note 8. [Now on p. 11, footnote 8] We respectfully 
request that the GAO provide the basis for the position taken in the 
Draft Report that publicly available requests for proposals do not 
constitute "published competitive procedures." 

The Authority is in the process of revising and refining its 
procedures: 

The Authority is revising its procurement procedures. Our current 
Business Plan includes a self-imposed requirement to revise the 
Contracting Policies and Procedures Manual. The update is underway 
and, upon completion, will include the incorporation of the 
Contracting Procedures Manual that we developed in 1998 for internal 
use and described in the Draft Report as "more detailed, substantive 
and prescriptive" than the Contracting Policies and Procedures Manual 
issued in 1993. We anticipate that the incorporation of the 1998 
Contracting Procedures Manual and other planned revisions to the 
manual published in 1993 will adequately address the concern stated in 
the Draft Report that the manual as published is too general. The 
revised manual will be printed and available upon request and 
accessible on the Authority's Website. 

The Authority agrees that the Department of Transportation and the 
public should be an important part of this process: 

The Draft Report recommends that the Authority should provide an 
opportunity for the Department of Transportation ("DOT") and the 
public to comment on the manual before publication. The Authority 
agrees. The Authority plans to provide a draft copy to DOT for comment 
and will develop a process to obtain comments from the public. [See 
comment 9] 

The Authority does obtain full and open competition: 

The Authority is committed to maximizing competition in its 
procurement process consistent with reasonable business practices 
needed for the respective airport environments. Our contracting 
actions are guided by and carried out in accordance with all 
applicable laws including the statutes establishing the Authority, the 
lease with the United States, sound contracting methods, and the 
highest standards of integrity and ethical conduct. 

The Authority disagrees with the Draft Report's conclusion that the 
Authority has not always satisfied its obligation to obtain, to the 
maximum extent practicable, full and open competition. This conclusion 
largely ignores that the Authority has successfully completed 
thousands of contracts using full and open competition as applicable 
to the Authority. 

The Authority is not a federal agency: 

The numerous references to the Authority as an "agency" and the tenor 
of the Draft Report, indicate that the frame of reference for lull and 
open competition' is the federal government. [See comment 3] See, 
e.g., Draft Report at pages 12—17, 21, and 24. [Now on pp. 14 to 19, 
23, and 26] But, the Authority is not a federal agency and is not 
obligated to conduct its contracting as a federal agency would. While 
the Draft Report ostensibly acknowledges this, it still persists in 
evaluating the non-federal Authority as if the federal rules applied — 
that is incorrect. 

The transfer of the airports out of the federal government in 1987 
meant that federal rules of all kinds, including procurement statutes 
and regulations, no longer applied to the Authority. See 49 U.S.C. § 
49111(b) (the Authority is "not subject to the requirements of any law 
solely by the reason of the retention by the United States Government 
of the fee simple title to the airports"). Accordingly, as the GAO 
concluded in its 1993 Report, the Authority can have procedures for 
"full and open" competition that differ from those applicable to a 
federal agency.[Footnote 2] [See comment 10] 

The Authority's lease requirement for "full and open" competition to 
the maximum extent practicable is broad by design and provides the 
Authority with the discretion to achieve Congress's intent to operate 
the airports in a businesslike manner. The Authority views the 
language and Congress's intent in the transfer as indicating support 
for commercial contracting practices that promote businesslike 
operations. The Authority notes that the statutes of the District of 
Columbia and the Commonwealth of Virginia establishing the Authority 
recognize the need for flexibility in contracting and consequently, 
exempt the Authority from Virginia and District of Columbia 
procurement statutes. See Va. Acts ch. 598, sec. 23; D.C. Acts 6-90, 
sec. 24. 

At the time the lease was signed, the Authority was vested with the 
power to use contracting and procurement practices and procedures: 

1. that are based on its business needs; 

2. that are not "inherently' linked to federal concepts of maximizing 
competition; and; 

3. that ensure the financial continuity of the Authority, a self-
supporting, independent interstate compact. 

In this environment, the Authority must look at more than the short-
term least cost alternatives. 

As such, the terms of the Lease presented new and perhaps not fully 
charted territory that, in the view of the Authority and the GAO in 
1993, have been navigated successfully by the Authority. If the GAO 
now wishes to chart a new course, it should do so only after careful 
consultation with the Authority and the Department of Transportation, 
so that the Airports Authority may operate in a manner consistent with 
the business structures utilized in the aviation industry. 

The specific criticisms of the Authority's procurement practices are 
unfounded and/or overstated: 

The Authority has reviewed the specific concerns raised by GAO on the 
appropriateness of certain of the Authority's procurement practices 
regarding the 35 contracts for goods or services reviewed in the Draft 
Report. These practices include: 

* Placing an emphasis on technical qualifications and considering cost 
for only those firms deemed the most technically qualified; [See 
comment 12] 

* Including contract options for work that was not priced at the time 
that the original contract was signed; [See comment 13] 

* Working with airlines to perform projects included in the capital 
construction plan in areas outside of the specific tenant's sublease; 
and; [See comment 14] 

* Acquiring additional goods or services through modifications to 
existing contracts. [See comment 15] 

The contracting practices described above have been used when 
appropriate to further the Authority's primary purpose — to operate 
well-run airports. The Authority's contracting procedures and 
practices do permit the placement of emphasis on technical quality as 
a more relevant indicator than cost. The practices also provide more 
flexible approaches to use options and modify contracts as well as the 
operational and practical benefits of working with the airlines to 
have facilities that meet their operational needs. All of these 
practices support the Authority's need to make timely decisions for 
the Airports' operations and the delivery of good quality facilities 
for customer service. [See comment 16] 

With respect to the 13 specific contracts reviewed in the draft 
report, the Authority did award the contracts based on full and open 
competition: 

The Authority does not concur with the Draft Report's conclusion that 
12 of 13 contracts selected were deficient in one or more aspect. The 
auditors selected the contracts with the highest cost growth. In doing 
so, the need to have a representative sample was ignored and, as a 
result, the conclusions in the report are apt to mislead a reader 
about the Authority' practices. [See comment 17] The observations and 
our responses are briefly summarized as follows: 

* The Authority does adhere to the evaluation factors and processes. 
[See comment 18] 

The Authority agrees with the Draft Report that staff evaluation teams 
do not have the latitude to alter published evaluation criteria. But, 
this is not the Authority's practice. In the particular contracts
reviewed, the collective thinking of an evaluation team led to a 
decision that the factors as initially stated were not adequate to 
complete an evaluation process. Adjusted evaluation criteria were 
applied to all proposals and did not limit the ability of any vendor 
to fully compete for the contract. See Attachment 2, Authority letter 
dated July 9, 2001. 

* The Authority did solicit competition for all of its procurement 
needs in eight of the 13 contracts. [See comment 19] 

The Authority modified eight contracts to obtain either additional 
work or services from vendors already under contract. Six of the 
contracts included options for work that in the Authority's view did 
not require pricing at the time the contract was awarded. None of
the competitors objected to this approach. The Authority also obtained 
additional goods and services that were not stated or priced in the 
original contract award from three of the eight vendors. 

The Authority's contracting procurement policies currently do not
require that all options be priced before contract award. The 
Authority's 1993 Contracting Policies and Procedures Manual does not 
specifically address the need to pre-price options or the necessity of 
obtaining and evaluating prices for the entirety of an award.
Option year pricing does not necessarily improve competition or reduce 
costs because the price is usually a key element, but not necessarily 
the controlling factor, in a decision to procure goods from a specific 
vendor. 

Moreover, in deferring cost decisions, the Authority maintains the 
flexibility to negotiate numerous items at the end of the base year, 
prior to making the decision regarding the exercise of the option 
year. The Authority does agree that the decisions on the acquisition 
and pricing of additional goods and services should be documented 
fully in the contract file. The Authority will consider its
approach to options in the course of revising the contracting 
procedures as discussed above. 

* The Authority did not improperly add work to three of the 13 
contracts. [See comment 20] 

The Authority modified three of the 13 contracts to include work not
envisioned at the beginning of the procurement process. We believe 
that in each of these instances the contract modification was 
appropriate and served the Authority's interests. The Authority does 
agree that decisions to expand the scope of work should be fully 
documented in the contract file or an alternative approach, such as a 
sole source award, should be considered. 

Conclusion: 

The Authority has run an extensive and successful contracting program 
and has complied with the lease provision regarding obtaining full and 
open competition to the maximum extent practicable through the use of 
published competitive procurement procedures. The federal lease 
recognizes that full and open competition may not always be the most 
"practicable" approach for achieving the Airports' business needs and 
that "full and open" in the context of the Authority is not 
necessarily the same as "full and open" in the context of a federal 
agency. [See comment 21] [See comment 22] 

The Authority published a procurement manual in 1993 and is committed 
to a revision to the current procedures. Comments by DOT and others 
will be considered prior to the updated manual being adopted by the 
Board of Directors and published. The Authority will provide your 
office with a copy of the updated procurement manual. 

The Authority appreciates the time expended by GAO staff on this 
matter. The Authority response presented herein identifies many points 
of disagreement between the Authority and the GAO. The Authority is 
available to discuss the positions taken in this response. If the GAO 
feels further dialogue would be beneficial to both parties prior to 
completion of a final report by the GAO, the Authority is available to 
schedule a meeting among appropriate representatives from the GAO, the 
Authority, and the Authority's outside counsel for procurement issues, 
Crowell & Moring LLP. 

Thank you for your consideration of these comments. 

Sincerely yours, 

Signed by: 

Carolyn Boone Lewis: 
Chairman: 

Attachments: 

cc: Authority Board of Directors. 

Footnotes: 

[1] Even under the inappropriate legal standards used in the Draft 
Report, see General Comments below, the Draft Report acknowledges that 
the Authority's approach on 20 of the 35 contracts reviewed was 
"acceptable." See Draft Report at pages 6, 11, and 28. Thus, the 
conclusions in the Draft Report are based on 15 handpicked contracts 
out of a universe of 2,843. [Now on pp. 6, 13, and 31] 

[2] The Authority does agree that the Authority can improve on the 
articulation of its policies and on what constitutes "full and open" 
competition in the Authority contracting context. The Authority 
intends to achieve this in the forthcoming revision of procedures. 

GAO’s Comments: 

The following are GAO’s additional comments on the Metropolitan 
Washington Airports Authority’s letter dated January 4, 2002. 

1. While MWAA’s database on contracting indicates that MWAA awarded 
2,843 contracts between January 1, 1992, and December 31, 1999, as 
discussed in this report, the database cannot be used to quantify the 
extent of MWAA’s use of full and open competition. Thus, any inference 
that MWAA has awarded thousands of contracts using competition to the 
extent required is, in our view, misleading. 

2. MWAA’s discussion of the universe of its contract awards (2,843) 
between 1992 and 1999 is not relevant to this review. This is because 
only those contracts exceeding $200,000 are subject to the requirement 
for full and open competition. Thus, as discussed in this report, we 
focused on two distinct groups of contracts that either exceeded 
$200,000 on the date of award or had exceeded $200,000 as of December 
31, 1999. In total, 646 contracts met these criteria. The 35 contracts 
that we examined were valued at about $408 million and accounted for 5 
percent of the 646 contract awards and 19 percent of the value of the 
646 contracts as of December 31, 1999. 

3. Our use of the term “agency” in our draft report was in no way 
meant to infer that MWAA is a federal agency. Thus, instead of “agency,”
 we generally substituted the term “organization.” 

4. We disagree that we largely ignored or quoted out-of-context the 
detailed comments MWAA provided in two letters dated June 29, 2001, 
and July 9, 2001. As reflected in our report, we conducted extensive 
follow-up on the comments and, thereafter, incorporated the comments 
and revised the report, as appropriate. 

5. We have not attached MWAA’s earlier letters to us because, as 
discussed, we previously incorporated these comments extensively 
throughout the report. Furthermore, one of the letters contains 
information that, for business reasons, MWAA asked us not to disclose. 

6. We revised this report to further emphasize that we did not examine 
MWAA’s concession contracts. 

7. We disagree that the tone of this report is “unduly harsh” and that 
our subtitles and headings mislead the reading audience. We also 
disagree that the report overstates and extrapolates our findings. In 
our opinion, both the captions and tone of the report appropriately 
reflect the problems that we identified. Furthermore, the report 
repeatedly acknowledges that the results of our contract reviews 
cannot be projected to the universe of MWAA’s contracts. Nevertheless, 
because MWAA permits several of the contracting practices that we 
found objectionable, we continue to believe that similar problems are 
likely among MWAA’s other contracts. Our findings and conclusions are 
based on a combination of factors, including (1) our review of MWAA’s 
contract files, (2) our assessment of MWAA’s contracting policies and 
procedures, and (3) MWAA’s interpretation and application of the 
requirement for full and open competition. As previously discussed, MWAA
’s interpretation of the requirement is inconsistent with generally 
recognized principles underlying the concept of full and open 
competition. 

8. MWAA’s inference that we reviewed its December 1993 Contracting 
Policies and Procedures Manual is incorrect. The manual did not exist 
at the time of our last audit and, even if we received the manual in 
1994, we had no reason to review it in the period between our audits. 

9. We did not specifically recommend that MWAA seek comments from the 
Department of Transportation prior to publishing its competitive 
procedures. Nevertheless, we agree with MWAA’s plan to do so. 

10. We agree that MWAA “can have procedures for ‘full and open’ 
competition that differ from those applicable to a federal agency.” 
Nevertheless, as discussed extensively in this report, the procedures 
must be in conformance with the fundamental principles underlying full 
and open competition. 

11. We agree that the statutes of the District of Columbia and the 
Commonwealth of Virginia, which chartered MWAA, exempt MWAA from 
procurement statutes applicable to those jurisdictions. However, the 
powers conferred in the charter are subordinate to the conditions 
imposed in MWAA’s lease with the federal government. 

12. As discussed in this report, if MWAA’s solicitations express its 
intent to consider cost in awarding its contracts, as indicated in its 
policy, MWAA must do so. On the other hand, if the solicitation 
indicates that MWAA will evaluate proposals only for technical 
acceptability (i.e., to establish whether a proposal meets MWAA’s 
minimum requirements), it can request technical proposals from firms 
and, on the basis of its evaluation of these proposals, seek cost 
proposals from only those firms that it finds acceptable. MWAA can 
also choose to award a contract solely on the basis of technical 
considerations (i.e., select the most qualified firm). However, given 
the importance of cost in awarding contracts, public contracting 
entities generally would avoid such an approach. 

13. As discussed in this report, exercising unpriced and unevaluated 
options is equivalent to the use of preplanned, noncompetitive, follow-
on contracts—regardless of whether the initial contract was 
competitively awarded. Thus, exercising such options is tantamount to 
making a sole-source award, since the work was not subject to any 
competition. If sole-source awards are adequately justified, MWAA’s 
board of directors can approve them. However, none of the contracts 
that we questioned were justified in writing or subsequently approved 
by the board. 

14. As discussed in this report, we do not object if MWAA uses 
airlines to accomplish work as long as the work is within the scope of 
MWAA’s sublease with the airlines. However, the three projects that we 
questioned were clearly outside the scope of the airline’s sublease 
and should, in our view, be properly viewed as subject to the 
requirement for full and open competition. 

15. As discussed in this report, there is nothing improper about 
modifying a contract to obtain additional goods or services as long as 
the goods and services are within the scope of the contract, including 
any changes clause. However, modifying a contract to obtain goods and 
services that are outside the scope of the contract represents a 
noncompetitive (sole-source) award. 

16. We disagree with MWAA’s view that the contracting practices that 
we questioned are appropriate and necessary to operate “well run 
airports.” As discussed in this report, federal, state, and local 
governments as well as other public entities conduct thousands of 
competitive procurements annually, expending billions of dollars. 
Collectively, these procurements have been used to build and maintain 
the public infrastructure in this country. On the basis of our 
knowledge of the Ronald Reagan Washington National and Washington 
Dulles International airports, MWAA’s procurements appear to be no 
more complex or challenging than many of these procurements. 
Nevertheless, MWAA and other contracting entities are free to use less 
than full and open competition when warranted by the situation and 
properly approved. 

17. We continue to believe that 12 of the 13 contracts were deficient 
with respect to one or more of the principles of full and open 
competition. 

18. MWAA’s comment regarding its adherence to evaluation factors and 
processes appears inconsistent. On the one hand, MWAA stressed that 
its evaluation teams may not alter published evaluation criteria and 
that it is not MWAA’s practice to do so. Nevertheless, MWAA 
acknowledged that for the contracts we reviewed, the evaluation team 
collectively decided to adjust the criteria to more adequately 
complete the evaluation. According to MWAA, the adjusted criteria were 
applied to all proposals and did not limit the ability of any vendor 
to compete. We disagree with MWAA’s view. As discussed in this report, 
MWAA did not (1) notify prospective contractors about its intent to 
deviate from the evaluation processes specified in its solicitations 
and (2) provide the contractors with an opportunity to amend their 
proposals. Thus, it is impossible to discern how contractors might 
have revised their proposals if they had been advised of changes in 
the relative importance of the evaluation factors. 

19. We disagree with MWAA’s assertion that it solicited competition 
for all of its needs on the contracts that we questioned. While MWAA 
believes that it does not need to obtain and evaluate the prices for 
contracts involving options, as discussed in this report, this view is 
at odds with the principles underlying full and open competition. 
Moreover, MWAA’s point that the contractors involved in the 
procurements did not object to MWAA’s approach is not the correct 
standard for judging whether any practice is appropriate. In fact, one 
could expect few if any complaints, since contractors are driven by 
self-interest and, thus, would likely prefer dealing directly with 
MWAA to establish the price of their options rather than competing 
against other contractors in establishing their prices. Finally, as 
discussed in this report, we continue to believe that obtaining and 
evaluating pricing for options in awarding contract options does not 
limit an organization’s flexibility. 

20. While MWAA contends that the out-of-scope modifications “served 
the Authority’s interest,” this does not make MWAA’s actions “
appropriate.” We continue to believe that MWAA’s “decisions to expand 
the scope of work” represented sole-source awards. Furthermore, while 
we agree with the necessity to document the reasons for adding out-of-
scope work to a contract, such documentation does not change the fact 
that the actions must be justified and approved on a sole-source 
basis. None of the out-of-scope modifications that we questioned were 
justified in writing or subsequently approved by MWAA’s board of 
directors. 

21. We disagree with MWAA’s view that it “has complied with the lease 
provision regarding obtaining full and open competition to the maximum 
extent practicable through the use of published competitive procedures.”
 As discussed throughout this report, MWAA did not obtain, to the 
maximum extent practicable, full and open competition on 15 of the 35 
contracts that we reviewed. Furthermore, it has not yet published the 
procedures it uses to award contracts competitively. 

22. Our report clearly notes that MWAA is not obligated to follow 
federal procurement statutes and regulations. Thus, as discussed 
throughout this report, we did not use federal procurement statutes or 
requirements to assess MWAA’s compliance with the statutory lease 
provision. Instead, as detailed in appendix I, we applied generally 
recognized principles underlying the concept of full and open 
competition. 

[End of section] 

Footnotes: 

[1] The Authority was created by the Commonwealth of Virginia and the 
District of Columbia as a public authority to operate the airports. 

[2] Identified practices included awarding contracts under procedures 
that were not publicly disclosed and extending one sole-source 
contract on several occasions without proper authorization. See 
Contract Award Practices: Metropolitan Washington Airports Authority 
Generally Observes Competitive Principles [hyperlink, 
http://www.gao.gov/products/GAO/RCED-93-63], Feb. 8, 1993). More 
recently, we provided information on the extent of contracting by the 
Authority. See Metropolitan Washington Airports Authority: Information 
on Contracting at Washington Dulles International Airport and Ronald 
Reagan Washington National Airport between 1992 and 1999 [hyperlink, 
http://www.gao.gov/products/GAO-01-185R], Nov. 17, 2000). 

[3] Two of the 13 contracts that we reviewed were awarded before 1992 
but were still open as of December 31, 1999. These contracts exhibited 
the highest cost growth among all of the contracts that exceeded $1 
million during the period. As discussed in further detail in appendix 
III, we focused on contracts with high cost escalation to determine 
whether the work associated with the cost increase had been subjected 
to full and open competition. 

[4] To project our results to the universe of the Authority’s 
contracts, we would have had to randomly select a large number of 
contracts for detailed analysis. Time did not permit such an 
exhaustive review. 

[5] The Airport Improvement Program provides federal grants for 
various airport development projects. 

[6] As of January 31, 2002, there were two vacancies on the board of 
directors. 

[7] Contracting Policies and Procedures Manual, December 1, 1993. 

[8] According to MWAA, it frequently provides procurement-specific 
guidance in its solicitation documents. While it is appropriate to 
include unique, procurement-specific information in its solicitations, 
this does not satisfy MWAA’s statutory obligation to obtain full and 
open competition through the use of published competitive procedures. 

[9] MWAA revised its contracting delegations in 1995 and 1998 and, in 
1999, moved its office to Reagan National. The ethics requirements 
were revised in 1998. 

[10] Contracting Procedures Manual, September 1, 1998. The 1998 
guidance is not applicable to the solicitation and award of MWAA’s 
concession contracts. MWAA has not developed detailed procedures for 
awarding its concession franchises because, in its view, each 
concession has unique characteristics that necessitate using different 
procedures. 

[11] According to MWAA officials, the 1998 guidance has been given to 
some prospective contractors upon request. However, the guidance has 
not been, among other things, advertised in trade publications; posted 
on MWAA’s contracting Web site; or distributed to local libraries and, 
as a result, cannot be construed as satisfying the requirement for 
published competitive procedures. 

[12] In one of the two procurements, both of the competing contractors 
exceeded the technical threshold established by MWAA. As a result, 
because MWAA evaluated the two cost proposals, neither firm was harmed 
by MWAA’s selection process. The impact on prospective contractors is 
more difficult to determine on the other procurement. Specifically, 
because only two of the four firms competing for the contract exceeded 
MWAA’s technical threshold of 85 percent (both scored 86 percent), the 
cost proposals of the other two firms were not opened and evaluated. 
Thus, it is not possible to know what, if any, impact the firms’ cost 
proposals could have had in the final selection process. These two 
firms scored 75 percent and 67 percent, respectively, on technical 
factors. 

[13] The higher a proposal’s technical merit, the more it is likely to 
cost. 

[14] According to MWAA’s unpublished 1998 contracting guidance, cost 
should normally account for at least 40 percent of the total 
evaluation score for its procurements. 

[15] According to MWAA, its board of directors approved the options 
associated with two of the eight contracts. We disagree. The evidence 
cited by MWAA demonstrates that a standing committee of the board-—not 
the full board—-approved the two procurements prior to their initial 
award. No evidence was provided of the committee’s approval of the 
sole-source follow-on contracts for the options. Furthermore, the 
committee has no authority to approve sole-source procurements. 
According to MWAA’s delegations of contracting authority, sole-source 
awards can be approved only by the full board. Similarly, the 
statutory lease provision specifies that exceptions to the requirement 
for full and open competition must be approved by a vote of seven 
members of the board—not five members, which was the case for this 
standing committee. Finally, even if the committee had authority to 
approve sole-source awards, it was not authorized to approve contracts 
exceeding $3 million. The value of both contracts (base award and 
options) exceeded $3 million. 

[16] The price submitted for the three additional buses was about 
$16,500 more per bus than the contract price for the six buses 
acquired under the base contract. However, MWAA subsequently 
negotiated the same price for all nine buses. 

[17] The renovation and expansion of the main terminal at Dulles, for 
example, was completed by early September 1996-—about 4 months before 
the contract was awarded. 

[18] According to the 1993 contracting guidance, MWAA’s objective is 
to provide prospective contractors with well-publicized, advance 
notification of its solicitation requirements. The unpublished 1998 
contracting guidance indicates that MWAA’s policy is to achieve, to 
the maximum extent practicable, full and open competition. Toward that 
end, MWAA requires all procurements over $200,000 to be advertised. 
According to the 1998 guidance, maximum competition is achieved by, 
among other things, advertising in newspapers and trade publications, 
posting solicitations to MWAA’s contracting Web site, and other 
outreach efforts. 

[19] Fifty-three firms received MWAA’s solicitation for this 
procurement. Twenty-eight of the 53 firms were initially sent the 
solicitation by MWAA. The remaining 25 firms received the solicitation 
after learning of it through other sources. According to MWAA, one 
source might have been its “Opportunity Alert” announcement that it 
sent to 275 firms. 

[20] MWAA’s 1993 contracting guidance is silent about the necessity of 
determining whether a price is fair and reasonable in situations in 
which there is no competition. In contrast, MWAA’s unpublished 1998 
guidance requires its contracting officers to prepare a memorandum of 
negotiations that describes, among other things, (1) MWAA’s objectives 
for each negotiation, (2) the outcome of the negotiations, and (3) the 
reasons why MWAA considers the negotiated price to be fair and 
reasonable. 

[21] According to MWAA’s June 29, 2001, letter to us, “the use of 
established business relationships, the need to make strategic 
decisions that affect the operational needs at the airports and 
customer service, and the benefits of known and dependable revenue 
streams argues for authorization to use unpriced options under certain 
circumstances.” 

[22] It follows from the fundamental principles of full and open 
competition that absent pricing, a valid, exercisable contract option 
does not exist. Furthermore, unless pricing is evaluated in making the 
contract award, a priced option cannot be said to have been competed. 
Appendix I provides additional information on this topic. 

[23] For example, recognizing the difficulties inherent in sole-source 
negotiations, the federal government generally requires certified cost 
and pricing data whenever pricing is not competitively determined to 
provide a verifiable basis for its price negotiations. 

[24] The federal government, for example, requires its contracting 
officers to determine that exercising an option is the most 
advantageous method of fulfilling the government’s needs. If 
exercising an option is not deemed to be in the government’s best 
interest, competition for the procurement is expected to be reopened. 
MWAA’s procedures do not specify a similar requirement. 

[25] As discussed in appendix I, the fundamental principles of full 
and open competition require that all work performed under every 
contract be competed. This means that work that may be ordered under a 
contract is limited to work that reasonably falls within the 
contract’s terms, including any changes clause that the contract may 
have. As a result, goods and services that differ materially from 
those that might reasonably have been provided under a contract are 
considered outside the scope of the contract. Amending a contract to 
purchase out-of-scope goods or services is a noncompetitive 
acquisition. 

[26] As part of the solicitation, MWAA provided contractors with a 
report prepared by the Department of Transportation that described the 
nature and magnitude of the improvements needed. The report identified 
a 5-year capital development program for Reagan National and Dulles 
totaling $280 million and $420 million, respectively. Through December 
31, 2000, over $2.4 billion had been expended on MWAA’s capital 
development program at the airports. The development program is 
expected to continue for many years. 

27 According to MWAA’s database, the 22 contracts were all awarded for 
more than $200,000 in 1998 and 1999 using less than full and open 
competition. 

[28] MWAA further indicated that it had assigned contract numbers to 
the projects simply as an administrative convenience to reimburse 
United for the improvements. 

[29] The agreements are called Use and Lease Agreements. 

[30] According to MWAA, it sometimes amends its sublease agreements to 
allow an airline to contract for improvements when the work to be 
performed is (1) within the airline’s premises or immediately adjacent 
to its premises and (2) when it is more efficient and expedient to 
have an airline control the construction. In such cases, MWAA 
reimburses the airline for the cost of the construction, usually up to 
a defined dollar threshold, and recovers the cost over time through 
rent on airline premises and other charges. 

[31] MWAA’s lease with the federal government allows MWAA to “sublease 
portions of the Leased Premises for use by subtenants, for purposes 
consistent with, and subject to the provisions of, this lease.” 
However, as specified in the lease, “no such sublease shall relieve 
the Authority from any of its obligations pursuant to this lease.” 

[32] MWAA’s charter authorizes it to make and enter into contracts 
that are “exclusive or limited when it is necessary to further the 
public safety, improve the quality of service, avoid duplication of 
services, or conserve airport property and the airport environment.” 

[33] By empowering MWAA to fund projects through the issuance of 
bonds, for example, Congress enabled MWAA to proceed with beneficial 
and long overdue renovations at the airports. 

[34] As discussed in its charter, MWAA is a public entity with public 
responsibilities. MWAA was formed for one specific purpose—-that is, 
to operate two government-owned airports. 

[35] For example, we identified significant differences in MWAA’s 
evaluation of proposals that were received in response to two 
solicitations. The differences occurred even though the solicitations 
contained nearly identical language describing the process MWAA 
intended to use to evaluate contractor proposals. In our view, such 
differences are at least in part attributable to MWAA’s failure to 
develop, publish, and follow an adequate set of established procedures. 

[36] Our November 17, 2000, report provides additional information 
about limitations in MWAA’s contracting database. See [hyperlink, 
http://www.gao.gov/products/GAO-01-185R]. 

[37] For example, see the Brief of Appellees, Metropolitan Washington 
Airports Authority in Washington-Dulles Transportation, Ltd., v. MWAA 
(C.A. 4th Cir., Rec. Nos. 00-2153 (L), 01-1095, Sept. 7, 2000), pp. 
11, 16-17 where MWAA represented to the court that we endorsed MWAA’s 
procurement process, stating: “Thus, the Authority has adopted and 
implemented competitive bid procedures as required by the Lease, and 
the GAO has determined that in doing so the ‘federal interest’ under 
the [provisions of MWAA’s lease] has been satisfied.” [Emphasis added.] 

[38] The complete requirement as defined in the Metropolitan 
Washington Airports Act of 1986, P.L. 99-500, title VI, § 6005(c)(4), 
100 Stat. 1783-376 (1986), creates an obligation to “obtain, to the 
maximum extent practicable, full and open competition through the use 
of published competitive procedures.” As required by the act, this 
language was incorporated in and agreed to by MWAA as Article 11.D of 
its lease with the federal government. Section 6005(c)(4) is codified 
at 49 U.S.C. § 49104(a)(4). The codified language uses the phrase “
complete and open competition” and otherwise differs slightly from the 
wording in the original legislation. Throughout, we refer to the 
requirement as it appears in the original act because (1) that is the 
language that appears in MWAA’s lease and (2) by the terms of the 
codification, the codified language is not to be construed as making 
any substantive change in the law. P.L. 105-102, §§ 4(a), (b), 111 
Stat. 2204, 2216 (1997). 

[39] The first published use of the term “full and free competition” 
by the comptroller general appears in 1 Comp. Gen. 688, 689 (1922); 
the first use of “full and open competition” is found at 16 Comp. Gen. 
404, 409 (1936). Also, see 20 Comp. Gen. 903, 907 (1941). The phrases “
full and fair competition,” “fair and open competition,” “open and 
free competition,” and “fair and free competition” have also been used 
to express similar thoughts, although less often. 

[40] P.L. 96-83, § 2, 93 Stat. 648 (1979). 

[41] Office of Federal Procurement Policy Act Amendments of 1983. P.L. 
98-191, § 3, 97 Stat. 1325 (1983). 

[42] P.L. 98-369, div. B, title VII, 98 Stat. 494, 1175 (1984). 

[43] 41 U.S.C. § 403(6). Furthermore, Congress adopted the Small 
Business and Federal Procurement Competition Enhancement Act of 1984, 
to further eliminate “procurement procedures and practices that 
unnecessarily inhibit full and open competition for contracts.” P.L. 
98-577, § 101, 98 Stat. 3066 (1984). 

[44] 132 Cong. Rec. S 3931-01 (1986). 

[45] Principles of Competition in Public Procurements (Approved by 
ABA’s House of Delegates, 1998). Also, see the ABA Section of Public 
Contract Law, Report to Accompany Principles of Competition in Public 
Procurements (1998). (Hereafter, ABA Report.) 

[46] The fundamental principles of full and open competition are 
embedded in the rules stated in both the 1979 and the 2000 versions of 
the model code. Indeed, the 1979 version was founded upon the 
principle enunciated in the concept of “fair and open competition,” 
words intended to convey much the same meaning as the phrase “full and 
open competition.” The authors of the 2000 version observed the 
following: 

“The 1979 Code offered states and local jurisdictions…a basic 
formulation of the fundamental principles upon which durable 
procurement systems rest…. The Revision Project did not result in any 
major changes to these basic principles. Indeed, these principles have 
become bedrock notions in American law associated with public 
procurement.” (Emphasis added, 2000 Model Code, p. iv). 

For materials related to the development of the model code, see Model 
Procurement Code for State and Local Governments, An Orientation and 
Forward Look, The Model Code Colloquia Program, Commonwealth of 
Pennsylvania (American Bar Association, 1976). 

[47] Annotations to the Model Procurement Code for State and Local 
Governments With Analytical Summary of State Enactments, American Bar 
Association Section of State and Local Governmental Law, p. vii (3d 
Ed., 1996). (Model Code Annotations.) Also, see 3 Va. Code § 11-35, et 
seq., revised and relocated to § 2.2-4300, et seq., by Virginia Acts 
2001, c. 844, eff. Oct. 1, 2001. According to the National Association 
of State Purchasing Official’s 1992 Survey of American Bar Association 
Model Procurement Code States, Model Code Annotations, supra, 273, 
Virginia adopted approximately 75 percent to 80 percent of the content 
of the model code. 

[48] ABA Report, §§ B.8, 10. 

[49] Harris Corp., B-194151, April 22, 1980, 80-1 CPD ¶ 282; M. J. 
Rudolph Corp., B-196159, Jan. 31, 1980, 80-1 CPD 84. Also, see ABA 
Report, § B.4. 

[50] All Cape Corp., B-275736, Mar. 20, 1997, 97-1 CPD ¶ 119. Also, 
see ABA Report, § B.5. 

[51] Cf. Trans World Maintenance, Inc., 65 Comp. Gen. 401 (1986), 86-1 
CPD ¶ 239. 

[52] See BBR Prestressed Tanks, 56 Comp. Gen. 575 (1977), 77-1 CPD ¶ 
302; Carolina Concrete Pipe Co., B-192361, Mar. 4, 1981, 81-1 CPD ¶ 
162, recognizing that the rule against undue restrictions on 
competition is fundamental to a requirement for full and open 
competition. ABA Report, § B.3. 

[53] Harris Corp., supra. 

[54] ABA Report, § B.6. 

[55] Analytical Services, Inc., B-202473, Mar. 9, 1982, 82-1 CPD ¶ 
214; aff’d. on recon., Dec. 6, 1982, 82-CPD ¶ 502. 

[56] ABA Report, § B.7. 

[57] Grey Advertising, Inc., 55 Comp. Gen. 1111, 1122 (1976), 76-1 CPD 
¶ 325; A. T. Kearney, Inc., B-205898, Feb. 28, 1983, 83-1 CPD ¶ 190. 

[58] A & J Manufacturing Co., 53 Comp. Gen. 838, 839-840 (1974), 74-1 
CPD ¶ 240. 

[59] ABA Report, § B.2. 

[60] Accord, AT&T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201, 
1205 (Fed. Cir., 1993). 

[61] For example, the changes clause used by the federal government 
empowers contracting officers to unilaterally determine the price of 
contract changes subject to accepted procedures for resolving 
disputes. 48 C.F.R. §§ 6.001(c), 43.201(a), 43.301(a)(1)(ii). 

[62] We have not, for example, treated unpriced and unevaluated 
options in the form of promises to negotiate preplanned, 
noncompetitive, follow-on contracts as appropriate because such 
promises do not create a unilateral right to place future orders for 
supplies or services at a determinable price. Report to the Secretary 
of Defense, B-217655, Apr. 23, 1986. 

[63] Model Code §§ 3-503. 

[64] Model Code §§ 5-401(1)(a)(i), 5-401(2)(a)(v), 6-101(1)(a)(i), and 
6-101(2)(a)(v). 

[65] AT&T Communications, Inc. v. Wiltel, Inc., supra, following 
American Air Filter Co.-DLA request for reconsideration , 57 Comp. 
Gen. 567, 572-573 (1978), 78-1 CPD ¶ 443. 

[66] Report to the Secretary of Defense, supra. 

[67] Department of Health and Human Services – Reconsideration, B-
198911.3, Oct. 6, 1981, 81-2 CPD ¶ 279; Varian Associates, Inc., B-
208281, Feb.16, 1983, 83-1 CPD ¶ 160. 

[68] Terms such as “full and open competition,” “maximum extent 
practicable,” and “through the use of published competitive procedures”
have specific meanings within the context of contracting by public 
entities. 

[69] We selected this period to account for MWAA’s contracting 
activities since the issuance of our 1993 report, which examined 
contract awards between 1989 and 1991. See Contract Award Practices: 
Metropolitan Washington Airports Authority Generally Observes 
Competitive Principles [hyperlink, 
http://www.gao.gov/products/GAO/RCED-93-63], Feb. 8, 1993). 

[70] Two of the 13 contracts that we selected for review were awarded 
before 1992 but were still open as of December 31, 1999. 

[71] We generally selected the 2 contracts with the highest cost 
increase within each category—services, supplies, and construction 
contracts awarded for (1) $1 million or more or (2) less than $1 
million. In two categories—-contracts for supplies awarded for under 
$1 million and contracts for services awarded for $1 million or more-—
we skipped contracts with higher cost increases to avoid selecting 
contracts that were for similar supplies and services—for example, two 
contracts for cleaning services. The alternative contracts we selected 
had the third highest and fifth highest cost increases within their 
respective selection categories. We focused on contracts experiencing 
a high percentage of cost increase, as reflected in MWAA’s database, 
to determine if the work associated with the cost increase had been 
subject to full and open competition. 

[72] This contract experienced the sixth highest cost increase among 
service contracts awarded for less than $1 million. 

[73] Our contract selections were limited to 1998 and 1999 because, 
prior to 1998, MWAA’s database did not routinely include information 
on the form of contract award-—that is, full and open competition, 
limited competition, or sole-source award. 

[74] To project our results to the universe of MWAA’s contracts, we 
would have had to randomly select a large number of contracts for 
detailed analysis. Time did not permit such an exhaustive review. 

[End of section] 

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