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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

March 2014: 

Federal Contracting: 

Noncompetitive Contracts Based on Urgency Need Additional Oversight: 

GAO-14-304: 

GAO Highlights: 

Highlights of GAO-14-304, a report to congressional committees. 

Why GAO Did This Study: 

Competition is a critical tool for achieving the best return on the 
government's investment. Federal agencies are generally required to 
award contracts competitively but are permitted to award 
noncompetitive contracts under certain circumstances, such as when 
requirements are of such an unusual and compelling urgency that the 
government would suffer serious financial or other injury. Contracts 
that use the urgency exception to competition must generally be no 
longer than one year in duration. 

The conference report for the National Defense Authorization Act of 
Fiscal Year 2013 mandated GAO to examine DOD's, State's, and USAID's 
use of this exception. For the three agencies, GAO assessed (1) the 
pattern of use, (2) the reasons agencies awarded urgent noncompetitive 
contracts and the extent to which justifications met FAR requirements; 
and (3) the extent to which agencies limited the duration. GAO 
analyzed federal procurement data, interviewed contracting officials, 
and analyzed a non-generalizable sample of 62 contracts with a mix of 
obligation levels and types of goods and services procured across the 
three agencies. 

What GAO Found: 

The Departments of Defense (DOD) and State and the U.S. Agency for 
International Development (USAID) used the urgency exception to a 
limited extent, but the reliability of some federal procurement data 
elements is questionable. For fiscal years 2010 through 2012, 
obligations reported under urgent noncompetitive contracts ranged from 
less than 1 percent to about 12 percent of all noncompetitive contract 
obligations. During that time, DOD obligated $12.5 billion 
noncompetitively to procure goods and services using the urgency 
exception, while State and USAID obligated $582 million and about $20 
million respectively, almost exclusively to procure services. Among 
the items procured were personal armor, guard services and 
communications equipment to support missions in Afghanistan and Iraq. 
GAO found coding errors that raise concerns about the reliability of 
federal procurement data on the use of the urgency exception. Nearly 
half—28 of the 62 contracts in GAO's sample—were incorrectly coded as 
having used the urgency exception when they did not. GAO found that 20 
of the 28 miscoded contracts were awarded using procedures that are 
more simple and separate from the requirements related to the use of 
the urgency exception. Ensuring reliability of procurement data is 
critical as these data are used to inform procurement policy decisions 
and facilitate oversight. 

For the 34 contracts in GAO's sample that were properly coded as 
having used the urgency exception, agencies cited a range of urgent 
circumstances, primarily to meet urgent needs for combat operations or 
to avoid unanticipated gaps in program support. The justifications and 
approvals—which are required by the Federal Acquisition Regulation 
(FAR) to contain certain facts and rationale to justify use of the 
urgency exception to competition—-generally contained the required 
elements; however, some were ambiguous about the specific risks to the 
government if the acquisition was delayed. 

Ten of the 34 contracts in GAO's sample had a period of performance of 
more than one year—8 of which were modified after award to extend the 
period of performance beyond 1 year. The FAR limits contracts using 
the urgency exception to one year in duration unless the head of the 
agency or a designee determines that exceptional circumstances apply. 
Agencies did not make this determination for the 10 contracts. The FAR 
is not clear about what steps agencies should take when a contract is 
modified after award to extend the period of performance over 1 year. 
Some contracting officials noted that these modifications are treated 
as separate contract actions and would not require the determination 
by the head of the agency or designee. Others considered them 
cumulative actions requiring the determination. Standards for Internal 
Controls in the Federal Government calls for organizations to maintain 
proper controls that ensure transparency and accountability for 
stewardship of government resources. The Office of Federal Procurement 
Policy (OFPP)—which provides governmentwide policy on federal 
contracting procedures—is in a position to clarify when the 
determination of exceptional circumstances is needed to help achieve 
consistent implementation of this requirement across the federal 
government. Further, under the urgency exception, the FAR requires 
agencies to seek offers from as many vendors as practicable given the 
circumstances. For some contracts in GAO's sample, lack of access to 
technical data rights and reliance on contractor expertise prevented 
agencies from obtaining competition. 

What GAO Recommends: 

GAO recommends that DOD, State and USAID provide guidance to improve 
data reliability and oversight for contracts awarded using the urgency 
exception. GAO also recommends that OFPP provide clarifying guidance 
to ensure consistent implementation of regulations. Agencies generally 
agreed with the recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-304]. For more 
information, contact Belva Martin at (202) 512-4841 or martinb@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Agencies Used the Urgency Exception to a Limited Extent and Procured a 
Range of Goods and Services, but Data Reliability Is Questionable: 

Agencies Cited a Range of Urgent Circumstances to Award Noncompetitive 
Contracts and Justifications Generally Contained Required Elements: 

Agencies Did Not Always Limit the Duration to 1 Year and Achieved 
Limited Competition in Selected Instances: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Summary of Contracts Included in Our Sample: 

Appendix III: DOD, State, and USAID Contracts That Exceeded 1 Year: 

Appendix IV: Comments from the Department of Defense: 

Appendix V: Comments from the Department of State: 

Appendix VI: Comments from the U.S. Agency for International 
Development: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: FAR Approval Levels for Justifications for Other Than Full 
and Open Competition: 

Table 2: Contracting Offices and the Number of Contracts Reviewed: 

Table 3: Summary of Contracts in Our Sample Awarded Under the Unusual 
and Compelling Urgency Exception: 

Figures: 

Figure 1: Elements of a Justification for Other Than Full and Open 
Competition Required by the FAR: 

Figure 2: Percent of Total Competitive and Noncompetitive Obligations 
for DOD, State, and USAID, Including Use of the Urgency Exception 
Compared to Use of Other Exceptions to Competition, Fiscal Years 2010 
through 2012: 

Figure 3: Percentage of DOD, State, and USAID Dollars Obligated for 
Goods and Services and Examples of Items Procured Using the Urgency 
Exception for Fiscal Years 2010 through 2012: 

Figure 4: Illustration of Data Entry Practices and FPDS-NG Validation 
Rules for Contracts Awarded Using Simplified Procedures: 

Figure 5: Increases in Contract Value to Procure Training and Program 
Support for the Persistent Ground Surveillance System: 

Figure 6: Time Line of Events to Procure the Aerostat for the 
Persistent Threat Detection System Program: 

Figure 7: Period of Performance for Contracts that Exceeded 1 Year: 

Abbreviations: 

AFRL: Air Force Research Laboratory: 

DLA: Defense Logistics Agency: 

DOD: Department of Defense: 

FAR: Federal Acquisition Regulation: 

FPDS-NG: Federal Procurement Data System-Next Generation: 

IED: improvised explosive device: 

ISR: intelligence, surveillance and reconnaissance: 

OFPP: Office of Federal Procurement Policy: 

OMB: Office of Management and Budget: 

PGSS: Persistent Ground Surveillance System: 

PTDS: Persistent Threat Detection System: 

State: Department of State: 

USAID: U.S. Agency for International Development: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

March 26, 2014: 

Congressional Committees: 

In fiscal year 2013, the federal government obligated more than $459 
billion to procure goods and services, of which approximately $164 
billion--about 36 percent--were not competed. Competition in 
contracting is a critical tool for achieving the best return on 
investment for taxpayers and can help save the taxpayer money, improve 
contractor performance, and promote accountability for results. While 
federal statute and acquisition regulations generally require that 
contracts be awarded on the basis of full and open competition, they 
also allow agencies to award noncompetitive contracts in certain 
circumstances. For example, when the agency's need for goods and 
services is of an unusual and compelling urgency that precludes full 
and open competition, agencies may be permitted to award 
noncompetitive contracts where a delay in award would result in 
serious financial or other injury to the government. Nonetheless, the 
Federal Acquisition Regulation (FAR) pertaining to the award of a 
noncompetitive contract on the basis of urgency requires that agencies 
request offers from as many sources as is practicable given the 
circumstances; however, agencies may limit the number of sources from 
which it solicits offers.[Footnote 1] 

Promoting competition--even in a limited form--increases the potential 
for quality goods and services at a lower price in urgent situations. 
Past GAO work has found that the federal government may realize 
significant cost savings when awarding contracts competitively. In 
fiscal year 2013, the federal government obligated about $3 billion 
through noncompetitive contracts on the basis of a compelling urgency 
to procure goods and services. Noncompetitive contracts carry the risk 
of overspending because, among other things, they have been negotiated 
without the benefit of competition, to help establish pricing; one way 
to mitigate risk is to limit the contract's performance period. In 
2009, a new requirement was included in the FAR that, among other 
things, limits the period of performance for contracts awarded 
noncompetitively on the grounds of urgency to no longer than 1 year 
unless there is a determination that exceptional circumstances apply. 
[Footnote 2] 

The conference report for the National Defense Authorization Act for 
Fiscal Year 2013 mandated that GAO review the use of the unusual and 
compelling urgency exception to full and open competition by the 
Departments of Defense (DOD) and State and the U.S. Agency for 
International Development (USAID).[Footnote 3] This report addresses: 
(1) the pattern of DOD's, State's, and USAID's use of the unusual and 
compelling urgency exception, including the range of goods and 
services acquired; (2) the reasons that agencies awarded 
noncompetitive contracts on the basis of urgency, and the extent to 
which justifications met requirements in the FAR; and (3) the extent 
to which agencies limited the duration of the contract and achieved 
competition in urgent situations. 

To determine patterns of DOD's, State's, and USAID's use of the 
unusual and compelling urgency exception to competition, we analyzed 
data from the Federal Procurement Data System-Next Generation (FPDS-
NG) for fiscal years 2010 through 2012, which represented the time 
period after the duration requirement went into effect and reflected 
the most current data to show trends over time. We determined that the 
federal procurement data were sufficiently reliable to identify these 
three agencies' use of the urgency exception, in part by verifying a 
non-generalizable random sample of the data and adjusting the data to 
account for known limitations by limiting our analysis to the 
procurement data we could reasonably confirm were awarded using the 
urgency exception. To determine the reasons that agencies awarded 
noncompetitive contracts on the basis of urgency and the extent to 
which justifications met FAR requirements, we used federal procurement 
data to select a non-generalizable sample of 62 contract files based 
on largest obligations and a mix of products and services contracts. 
We analyzed justifications and other documents agencies used to seek 
approval to limit competition on the selected contracts to identify 
agencies' rationale for using the urgency exception and determined 
whether they met FAR requirements. We conducted legal research, 
analyzed DOD, State, and USAID policies and guidance, and interviewed 
officials on use of the urgency exception. We compared agencies' 
policies and procedures with the Standards for Internal Control in the 
Federal Government which calls for documenting transactions to provide 
evidence of implementation.[Footnote 4] To determine the extent to 
which agencies complied with the FAR requirement to limit the contract 
period and obtained competition, we performed an in depth review of 
contract files for 34 selected contracts that we identified from our 
sample of 62 contracts were awarded using the unusual and compelling 
urgency exception. In addition, we spoke with officials from the 
Office of Federal Procurement Policy (OFPP) in the Office of 
Management and Budget (OMB)--which has responsibility for federal 
procurement policy--about agencies' approaches to implement the FAR 
requirement to limit the period of performance for contracts awarded 
under the urgency exception. We compared agencies' approaches to 
implement the FAR requirement to limit the period of performance with 
Standards for Internal Control in the Federal Government which calls 
for organizations to maintain proper controls to ensure transparency 
and accountability for stewardship of resources.[Footnote 5] 

A more detailed description of our scope and methodology is presented 
in appendix I. We conducted this performance audit from March 2013 
through March 2014 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

Background: 

Agencies are generally required to use full and open competition--
achieved when all responsible sources are permitted to compete--when 
awarding contracts. However, the Competition in Contracting Act of 
1984 recognizes that full and open competition is not feasible in all 
circumstances and authorizes contracting without full and open 
competition under certain conditions.[Footnote 6] Examples of 
allowable exceptions to full and open competition include 
circumstances when the contractor is the only source capable of 
performing the work or when disclosure of the agency's need would 
compromise national security. An agency may also award a contract 
noncompetitively when the need for goods and services is of such an 
unusual and compelling urgency that the federal government faces the 
risk of serious financial or other injury.[Footnote 7] 

When using the urgency exception to competition, an agency may limit 
competition to the firms it reasonably believes can perform the work 
in the time available. However, an agency is not permitted to award a 
noncompetitive contract where the urgent need has been brought about 
due to a lack of advanced planning. Unlike the other exceptions to 
competition provided by the FAR, awards that use the urgency exception 
have certain time restrictions. Specifically, the total period of 
performance is limited to the time necessary to meet the requirement 
and for the agency to enter into another contract through the use of 
competitive procedures. Further, the period of performance may not 
exceed 1 year unless the head of the agency or appointed designee 
determines that exceptional circumstances apply. 

Generally, noncompetitive awards must be supported by written 
justifications that contain sufficient facts and rationale to justify 
use of the specific exception to competition that is being applied to 
the procurement. At a minimum, justifications must include 12 elements 
specified in the FAR, including a description of the goods and 
services being procured, market research conducted, and efforts to 
solicit offers, among other things, as shown in figure 1. 

Figure 1: Elements of a Justification for Other Than Full and Open 
Competition Required by the FAR: 

[Refer to PDF for image: illustration] 

Justification for Other Than Full and Open Competition: 

When preparing a justification for other than full and open 
competition, agencies are required to include the following 
information: 

* Identification of the agency and the contracting activity, and 
specific identification of the document as a “justification for other 
than full and open competition”. 

* Nature and/or description of the action being approved. 

* Description of the supplies and services required to meet the 
agency's needs, including the estimated value. 

* Identification of the statutory authority permitting other than full 
and open competition. 

* Demonstration that the proposed contractor's unique qualifications 
or the nature of the acquisition requires use of the authority cited. 

* Description of efforts made to ensure that offers are solicited from 
as many potential sources as is practicable, including whether a 
notice was or will be publicized. 

* Determination by the contracting officer that the anticipated cost 
to the government will be fair and reasonable. 

* Description of the market research conducted and the results of the 
research or a statement as to why market research was not conducted. 

* Any other facts supporting use of other than full and open 
competition, such as an explanation why technical data packages, 
engineering descriptions, statements of work suitable for full and 
open competition have not been developed or are not available. When 
the urgency exception is cited, data, estimated cost, or other 
rationale as to the extent and nature of the harm to the Government. 

* A listing of the sources, if any, that expressed, in writing, an 
interest in the acquisition. 

* Statement of the actions, if any, the agency may take to remove or 
overcome any barriers to competition before subsequent acquisitions 
for the supplies or services are required. 

* Contracting officer certification that the justification is accurate 
and complete to the best of the officer's knowledge and belief. 

Source: Federal Acquisition Regulation. 

[End of figure] 

For noncompetitive awards using the urgency exception, justifications 
may be prepared and approved within a reasonable time after award when 
doing so prior to award would unreasonably delay the acquisition. 
Justifications are to be published--on the Federal Business 
Opportunities website (FedBizOpps)--generally, within 30 days after 
contract award.[Footnote 8] Additionally, justifications must be 
approved at various levels within the contracting organization. These 
levels vary according to the estimated total dollar value of the 
proposed contract, including all options. As outlined in table 1, the 
approval levels range from the contracting officer for smaller dollar 
contracts up to the agency's senior procurement executive for larger 
dollar contracts. 

Table 1: FAR Approval Levels for Justifications for Other Than Full 
and Open Competition: 

Estimated value of proposed contract action: $650,000 or less; 
Approval by: Contracting officer. 

Estimated value of proposed contract action: Over $650,000 but not 
exceeding $12.5 million; 
Approval by: Competition advocate for the procuring activity or 
officials authorized to approve at a higher level. 

Estimated value of proposed contract action: Over $12.5 million but 
not exceeding $62.5 million ($85.5 million for DOD, NASA[A] , and 
Coast Guard); 
Approval by: Head of the procuring activity, or designee meeting 
certain criteria. 

Estimated value of proposed contract action: More than $62.5 million 
(or $85.5 million for DOD, NASA, and Coast Guard); 
Approval by: Agency senior procurement executive. 

Source: Federal Acquisition Regulation. 

[A] National Aeronautics and Space Administration. 

[End of table] 

The FAR has more streamlined procedures for awarding contracts under 
the simplified acquisition threshold--generally less than $150,000. 
These smaller dollar awards are exempt from the justification and 
documentation requirements described above for contracts over this 
threshold. For example, contracting officers awarding a contract under 
simplified acquisition procedures must only document the determination 
that competition was not feasible; no approval beyond the contracting 
officer is required. Further, agencies do not have to document the 
extent and nature of the harm to the government that necessitates 
limiting competition when using simplified acquisition procedures. 
When using these procedures, agencies may solicit an offer from one 
contractor in certain circumstances, including when the contracting 
officer determines that only one source is reasonably available. 
[Footnote 9] 

In general, once a contract is awarded, the awarding agency must enter 
certain information into FPDS-NG, the federal government's database 
that captures information on contract awards and obligations. Agencies 
are responsible for the quality of the information entered into the 
database. Data captured includes, for example, the contract value, 
whether the contract was awarded competitively or not, and what 
authority was used to award the contract noncompetitively. In FPDS-NG, 
there are three fields for agencies to report competition data for 
contracts awarded: 

* Extent competed: the competitive nature of the contract awarded, for 
example, whether the contract was awarded using full and open 
competition or not competed using simplified acquisition procedures. 

* Solicitation procedure: the procedure an agency used to solicit 
offers for a proposed contract opportunity, for example, soliciting an 
offer from only one contractor because the agency deemed only one 
source available to fulfill the need or soliciting offers pursuant to 
simplified acquisition procedures. 

* Other than full and open competition: the reason an award was not 
competed and the authority used to forego full and open competition, 
for example, the unusual and compelling urgency exception to 
competition. For the purposes of this report, we refer to this field 
as "the reason not competed" to be more descriptive of the content in 
the field. 

Agencies Used the Urgency Exception to a Limited Extent and Procured a 
Range of Goods and Services, but Data Reliability Is Questionable: 

DOD's, State's, and USAID's Use of the Urgency Exception Is Small 
Compared to Other Exceptions to Competition: 

Based on data from FPDS-NG, DOD, State, and USAID obligations for 
contracts and task orders reported as using the urgency exception 
during fiscal years 2010 through 2012 were small relative to other 
exceptions to full and open competition.[Footnote 10] Of the $998 
billion that DOD obligated for all contracts during this period, $432 
billion or 43 percent were awarded noncompetitively; however, only 
about $12.5 billion--or about 3 percent--of DOD's noncompetitive 
obligations were awarded under the urgency exception. Less than 1 
percent of USAID's noncompetitive obligations--$3.3 billion--were 
obligated under the urgency exception. In comparison to DOD and USAID, 
State's obligations under the urgency exception were more substantial, 
accounting for 12.5 percent--or $582 million--of its noncompetitive 
obligations, as shown in figure 2. 

Figure 2: Percent of Total Competitive and Noncompetitive Obligations 
for DOD, State, and USAID, Including Use of the Urgency Exception 
Compared to Use of Other Exceptions to Competition, Fiscal Years 2010 
through 2012: 

[Refer to PDF for image: 3 pie-charts] 

DOD: 
Total obligations for non-competed contract actions using the urgency 
exception: $12.5 billion; 
Total obligations for non-competed contract actions using all other 
exceptions: $419.4 billion; 
Total obligations for competed contract actions: $566.2 billion. 

State: 
Total obligations for non-competed contract actions using the urgency 
exception: $0.58 billion; 
Total obligations for non-competed contract actions using all other 
exceptions: $4.1 billion; 
Total obligations for competed contract actions: $16.6 billion. 

USAID: 
Total obligations for non-competed contract actions using the urgency 
exception: $0.02 billion; 
Total obligations for non-competed contract actions using all other 
exceptions: $3.3 billion; 
Total obligations for competed contract actions: $11.3 billion. 

Source: GAO analysis of federal procurement data. 

[End of figure] 

DOD's obligations under the urgency exception accounted for more than 
85 percent of the total dollars obligated using the urgency exception 
across the federal government from fiscal years 2010 through 2012. 
Among civilian agencies, State and USAID obligations using the urgency 
exception accounted for about 4 percent and less than 1 percent of 
total urgency obligations across the federal government, respectively. 
DOD and USAID's obligations under the urgency exception remained 
relatively constant for fiscal years 2010 through 2012; however, 
State's obligations in fiscal year 2011 were $301.4 million, more than 
a twelvefold increase over its fiscal year 2010 obligations, which 
totaled $24.4 million. Most of the increase can be attributed to three 
contracts, which altogether totaled more than 75 percent of State's 
total urgency obligations in fiscal year 2011.[Footnote 11] 

Agencies Procured a Range of Goods and Services Using the Urgency 
Exception: 

Our analysis of FPDS-NG data showed that use of the urgency exception 
varied in the types of goods and services acquired across DOD, State, 
and USAID for fiscal years 2010 through 2012. As figure 3 shows, State 
and USAID obligated funds to almost exclusively procure services while 
DOD obligated funds to procure an equal percentage of goods and 
services. During the 3-year period, DOD procured a broad range of 
items with more than half of funds--or over $6 billion--for research 
and development and to purchase communications and radar equipment. 
For State, about 60 percent of funds--over $335 million--were 
obligated to procure guard protection services at U.S. embassies and 
other facilities. For USAID, nearly half of its funds--more than $9 
million--were obligated to support construction of roads and highways 
and to procure education and training services. 

Figure 3: Percentage of DOD, State, and USAID Dollars Obligated for 
Goods and Services and Examples of Items Procured Using the Urgency 
Exception for Fiscal Years 2010 through 2012: 

[Refer to PDF for image: illustrated table] 

Agency: DOD; 
Percentage of goods and services procured: 
Goods: $6 billion; 
Services: $6.5 billion; 
Example of goods procured: Goods procured included weapons, 
ammunition, and explosives; aircraft and vehicle components; radar
equipment; personal armor; and clothing to protect against improvised 
explosive devices; and medical equipment and supplies; 
Example of services procured: Services procured included research and 
development of systems; engineering and technical support; information 
technology and telecommunications; equipment maintenance; program 
management and administrative support; education and 
training,operating air traffic towers, sewage and waste treatment and 
storage, and garbage collection. 

Agency: State; 
Percentage of goods and services procured: 
Goods: $30.1 million; 
Services: $550.8 million; 
Example of goods procured: Goods procured included radio and television
equipment, prefabricated doors and windows, and generators; 
Example of services procured: Services were procured to provide 
security, internet and telecommunications; and administrative and
management support. In addition, other procurements categorized as 
services included travel and lodging, and facilities support to 
operate government-occupied buildings such as the U.S. embassy in Iraq. 

Agency: USAID; 
Percentage of goods and services procured: 
Goods: $0.07 million; 
Services: $19.4 million; 
Example of goods procured: All goods procured for this time period 
were reported in the federal procurement database as miscellaneous 
items, which are defined as items which cannot be otherwise classified 
in any existing federal procurement database class; 
Example of services procured: Services that were procured included 
education and training; engineering and program management support, 
contractors to perform personal services, such as providing short-term 
transition assistance in conflict prone countries; and construction of 
roads, bridges, and railways. 

Source: GAO analysis of federal procurement data. 

[End of figure] 

Coding Errors and Limitations Highlight Federal Procurement Data 
Reliability Concerns: 

We found coding errors in FPDS-NG for contracts awarded by DOD, State, 
and USAID. Specifically, of the 62 contracts we selected for our 
sample, 28 were reported in FPDS-NG as being awarded noncompetitively 
using the urgency exception, but were not. Of the 28 contracts that 
were not correctly reported in FPDS-NG, three contracts were awarded 
using other exceptions to competition, such as national security, five 
were awarded using a unique authority to award noncompetitive 
contracts at USAID, and 20 contracts were awarded using simplified 
acquisition procedures. We note that our sample is not representative 
of all dollars obligated for federal contracts. 

We found three Air Force contracts that were incorrectly coded in FPDS-
NG as awarded using the urgency exception to competition, but the 
contract file documentation confirmed that these contracts were 
awarded noncompetitively on the basis of national security concerns or 
that only one vendor could supply the requirement. Of these three 
contracts, two were awarded noncompetitively to procure an unmanned 
aircraft system and replacement aircraft accessories on the basis that 
disclosure of the agency's need would compromise national security. 
Officials explained that these coding errors were due to an 
administrative oversight. For the remaining contract which was awarded 
on the basis that only one contractor could perform the work, 
officials identified and corrected the error during a routine 
inspection that occurred after we included the contract in our sample. 

We identified five USAID contracts that were noncompetitive awards 
using an authority unique to USAID that allows the agency to award 
noncompetitive contracts where competition would impair or otherwise 
have an adverse effect on programs conducted for the purposes of 
foreign aid, relief, and rehabilitation.[Footnote 12] FPDS-NG does not 
include an option to report noncompetitive awards using USAID's unique 
exception to competition. Thus, according to USAID officials, 
contracting staff use their professional judgment to choose an option 
in FPDS-NG that most closely matches the circumstances of the award. 
This may include reporting the noncompeted award as being procured 
using the urgency exception. We did not assess the extent to which 
USAID consistently reported these awards using the urgency exception 
versus other exceptions to competition. 

Twenty of the contracts were awarded for less than $150,000 using 
simplified acquisition procedures. These contracts were awarded 
noncompetitively on the basis that the good or service was required 
immediately and only one source was deemed reasonably available. The 
contract file documentation showed that DOD, State, and USAID procured 
various goods and services--including water purification systems, 
furniture storage space, drapes and holiday gifts--using streamlined 
procedures for simplified acquisitions. However, when recording the 
reason these contracts were not competed in FPDS-NG, DOD, State, and 
USAID incorrectly reported that these contracts were awarded using the 
unusual and compelling urgency exception to full and open competition. 
Contracting officials attributed these coding errors to an 
administrative oversight and some officials admitted to confusion 
about how to input data in FPDS-NG. Such inaccurate reporting adds to 
existing concerns about the reliability of some data elements in FPDS-
NG which GAO has reported on previously.[Footnote 13] 

For the 20 contracts awarded using simplified procedures, we found 
that the potential for confusion arises when agencies are directed in 
FPDS-NG to record the solicitation procedure and the extent to which a 
contract was competed. Based on our analysis of contracts reported as 
using the urgency exception to competition, when reporting which 
solicitation procedure was used, contracting staff frequently selected 
the entry labeled "only one source." This denotes that the agency did 
not solicit offers from potential vendors because it determined only 
one source was reasonably available given the urgent need. Agencies 
also selected the entry labeled "not competed" when reporting the 
extent to which a contract was competed. 

Figure 4: Illustration of Data Entry Practices and FPDS-NG Validation 
Rules for Contracts Awarded Using Simplified Procedures: 

[Refer to PDF for image: illustration] 

What is happening: 

Extent competed: 
* Not competed; 
* Competed under simplified acquisition procedures (SAP); 
* Follow on to competed action; 
* Full and open competition; 
* Full and open competition after exclusion of sources; 
* Not available for competition; 
* Not competed under SAP. 

Solicitation procedures: 
* Only one source; 
* Alternative sources; 
* Architect-engineer; 
* Basic research; 
* Negotiated proposal/quote; 
* Sealed bid; 
* Simplified acquisition; 
* Subject to multiple award fair opportunity; 
* Two step. 

Reason not competed: 
* Only one source-other; 
* Urgency; 
* Mobilization, essential research & development; 
* International agreement; 
* Authorized by statute or resale; 
* National security; 
* Public interest; 
* SAP non-competition: 
- Based on the previous selections, “SAP non-competition” is not 
available for selection. 

What should be happening: 

Extent competed: 
* Not competed; 
* Competed under simplified acquisition procedures (SAP); 
* Follow on to competed action; 
* Full and open competition; 
* Full and open competition after exclusion of sources; 
* Not available for competition; 
* Not competed under SAP. 

Solicitation procedures: 
* Only one source; 
* Alternative sources; 
* Architect-engineer; 
* Basic research; 
* Negotiated proposal/quote; 
* Sealed bid; 
* Simplified acquisition; 
* Subject to multiple award fair opportunity; 
* Two step. 

Reason not competed: 
* Only one source-other; 
* Urgency; 
* Mobilization, essential research & development; 
* International agreement; 
* Authorized by statute or resale; 
* National security; 
* Public interest; 
* SAP non-competition: 
- Based on the previous selections, “SAP non-competition” is 
available for selection. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation documents. 

[End of figure] 

As figure 4 illustrates, when contracting staff select "only one 
source" in the solicitation procedure field, FPDS-NG validation rules 
do not allow the selection of simplified acquisition procedures in the 
field for the "reason not competed". For these contracts, per FPDS-NG 
instructions, contracting staff should have reported these awards as 
"simplified acquisition" under solicitation procedure and "not 
competed under simplified acquisition procedures" in the extent 
competed field. Consistent with FPDS-NG database instructions, using 
this approach would restrict the data entry options available when 
reporting the reason not competed to simplified acquisition 
procedures. During the course of our review, the Defense Logistics 
Agency (DLA) within DOD used this approach to correct the entry in 
FPDS-NG for two awards under $150,000 that are now recorded as sole-
source awards using simplified acquisition procedures which is 
consistent with the records maintained in the corresponding contract 
files. In 2010, DOD issued guidance to, among other things, help 
improve the quality of data reported in FPDS-NG for contracts awarded 
using simplified acquisition procedures. For fiscal years 2010 through 
2012, data in FPDS-NG showed that collectively DOD, State, and USAID 
reported 13,040 noncompetitive contracts under $150,000 as being 
awarded under the urgency exception. The total obligation for these 
contracts was over $284 million. Ensuring contracts are correctly 
coded in FPDS-NG is critical as the data are used to inform 
procurement policy decisions and facilitate congressional oversight. 

Agencies Cited a Range of Urgent Circumstances to Award Noncompetitive 
Contracts and Justifications Generally Contained Required Elements: 

After excluding the contracts we identified with data errors, we found 
that 34 contracts were awarded noncompetitively using the unusual and 
compelling urgency exception to competition to meet a range of urgent 
situations.[Footnote 14] Our sample included DOD contracts that were 
awarded to meet urgent operational needs for combat operations in 
Afghanistan and Iraq, including two contracts that highlight the risk 
of using the urgency exception for research and development 
initiatives to immediately field capabilities for combat operations. 
In addition, our sample consisted of contracts awarded to avoid a 
lapse in program support resulting from firms protesting the award of 
a competitive contract or from changes in program requirements. 
Generally, noncompetitive awards--such as those using the urgency 
exception--must be supported by written justifications that contain 
the facts and rationale to justify use of an exception to competition. 
While justifications in our sample generally contained the required 
information, some fell short of the FAR requirements and did not 
obtain the necessary signatures or make justifications publicly 
available. Other justifications were written ambiguously in terms of 
including other facts supporting the use of the urgency exception, 
such as the nature of the harm to the government. 

Agencies Awarded Noncompetitive Contracts to Meet a Range of Urgent 
Situations: 

For the 34 contracts in our sample, DOD, State, and USAID cited a 
range of urgent situations that precluded full and open competition. 
More than half of the contracts were awarded to procure goods and 
services to support various missions in Afghanistan and Iraq. The two 
most common reasons agencies cited for awarding noncompetitive 
contracts on the basis of urgency--sometimes for the same contract--
were to meet urgent operational needs for combat operations and to 
avoid a gap in program support resulting from unanticipated events. 
The remaining contracts supported unique circumstances such as 
fulfilling increased demand for fuel, providing telecommunications 
support for a foreign delegation visit, obtaining equipment for an 
unscheduled naval mission, and addressing emergency vehicle repairs. 
See Appendix II for a summary of the 34 contracts in our sample. 

DOD Sought to Meet Urgent Operational Needs for Combat Operations: 

DOD awarded 16 contracts, valued at $1.2 billion, to rapidly acquire 
and provide capabilities to meet urgent needs that, DOD maintained, if 
not addressed immediately, would seriously endanger personnel or pose 
a threat to ongoing combat operations. These needs involved two 
primary capabilities: intelligence, surveillance, and reconnaissance 
(ISR)--such as airships--and systems to protect against attacks from 
improvised explosive devices. DOD's acquisition policy states that 
urgent operational needs are among the highest priority acquisitions 
and identifies the urgency exception as one of the tools available to 
provide urgently needed capabilities to the warfighter more quickly by 
reducing the amount of time needed to award a contract.[Footnote 15] 
In an April 2012 report, GAO found that some DOD programs to meet 
urgent operational needs were able to reach contract award sooner by 
relying on urgent noncompetitive awards; however, this reliance could 
affect the price the government pays.[Footnote 16] Recognizing the 
need to quickly deliver capabilities in urgent conditions--sometimes 
within days or months--DOD policy calls for delivering solutions for 
urgent needs within 24 months of when the urgent operational need is 
identified and validated. Within the sample of urgent DOD awards we 
reviewed, many of the capabilities acquired in response to urgent 
operational needs were fielded within 3 to 20 months of when the 
requirement was identified. For example, by relying on an existing 
technology, the Army was able to quickly field 29 surveillance 
aerostats within 10 months of validating the urgent operational need. 
DOD contracting officials we spoke with told us they expect decreases 
in the number of noncompetitive awards on the basis of urgency to meet 
urgent operational needs because of the drawdown in military 
operations in Iraq and Afghanistan. 

Two DOD awards within our sample highlighted the risks of using the 
urgency exception to competition to award contracts for research and 
development initiatives to meet immediate combat operation needs. DOD 
policy identifies efforts best suited for rapid fielding of urgently 
needed capabilities as those that do not require substantial 
development effort, are based on proven and available technologies, 
and can be acquired under a fixed price contract. 

In the first example, the Air Force's Blue Devil Block 2 program used 
the urgency exception to purchase previously unproven technology for 
improved ISR capability. GAO and the DOD Inspector General have 
previously reported that the program faced various challenges. 
[Footnote 17] In 2009, the Air Force first identified the need for the 
program following a presentation from the contractor for an airship 
concept that could take off and land vertically while requiring fewer 
personnel to assist with landing than traditional airships. In March 
2010, the contractor submitted an unsolicited proposal to the Air 
Force for the development of the Blue Devil Block 2 airship. The Air 
Force Research Laboratory (AFRL) conducted an assessment of the 
program and determined that the proposed 24 month schedule was 
aggressive and likely unachievable. As an alternative, AFRL proposed a 
strategy to develop the airship in 34 months using competitive 
procedures. In September 2010, the Secretary of Defense designated the 
procurement of the airship as an urgent need to be rapidly acquired, 
and set the expectation that it be deployed within 13 months. The 
following month, AFRL conducted a second assessment of the program and 
again determined that it was not suitable for rapid fielding within 24 
months due to concerns about the technical capability of the 
contractor and poorly defined requirements. Despite AFRL's assessment, 
the Air Force awarded an $86.2 million contract in March 2011 based on 
urgency for delivery of the airship in January 2012. In an October 
2012 report, GAO found that this program experienced significant 
technical problems resulting in cost overruns and schedule delays that 
led to termination of the program in June 2012, which was 5 months 
after the planned fielding date of January 2012.[Footnote 18] 
Ultimately, the program was terminated after spending more than $149 
million and without fulfilling the urgent requirement for a deployable 
ISR airship. 

In the second example, the Air Force awarded a noncompetitive contract 
in 2011 on the basis of urgency for the development of the Orion 
unmanned aerial system in response to an urgent operational need for 
ISR capabilities to support multiple services in Afghanistan. The new 
system was expected to provide greater uninterrupted flight times than 
other available systems. The contract was awarded with a period of 
performance of 13 months; however, the justification did not specify a 
fielding date. After award, the cost of the contract nearly tripled 
from the initial estimate of $5 million to a total of about $15 
million and the period of performance doubled from 13 months to 26 
months. Contracting officials said that cost increases and schedule 
delays were due to technical problems experienced by the contractor in 
developing the proposed technology. Nearly 3 years since the 
requirement was validated as an urgent need, this system has not been 
fielded in Afghanistan and is still under development through a follow-
on contract. 

GAO has previously found that initiatives for urgent operational needs 
that required technology development often take longer to field. 
[Footnote 19] Contracting officials we spoke with said that both 
programs relied heavily on unproven technologies that required 
extensive research and development, which contributed, in part, to the 
cancellation and delay of the Blue Devil and Orion systems, 
respectively. Further, officials noted that initiatives to respond to 
urgent operational needs tend to have more successful outcomes when 
the solutions are based on proven, mature technologies. 

Agencies Sought to Avoid a Gap in Program Support Resulting from 
Unanticipated Events: 

DOD, State, and USAID awarded 12 noncompetitive contracts when 
unexpected events threatened the agencies' ability to continue program 
support. Referred to as bridge contracts, such awards are typically 
short term to avoid a lapse in program support while the award of a 
follow-on contract is being planned. The contract period for the 12 
bridge awards in our sample averaged 11 months and collectively they 
were valued at a total of over $466 million. For the bridge contracts 
that we reviewed, the delay in awarding a competitive contract was due 
to unforeseen personnel changes, competitors filing bid protests, and 
changes in program requirements, among other things. For 10 of the 12 
bridge contracts in our sample, agencies awarded the contract to a 
vendor that had previously performed the work. 

* In one instance, the Air Force's plans to competitively award a 
follow-on contract for engineering support services was disrupted by 
the unexpected loss of the program manager who had specialized 
expertise and had been working independently on the acquisition 
strategy for about 1 year. A new program manager was assigned but had 
difficulty accessing his predecessor's files which further delayed the 
acquisition effort. The justification cited that a gap in program 
support would jeopardize ongoing research and expose the Air Force to 
certain fines and penalties. Faced with the possibility of costly 
delays estimated to be $1.5 million per month, the Air Force opted to 
award a non-competitive bridge contract to the incumbent vendor who 
was deemed most capable of meeting the program's requirements within 
the timeframes needed. Officials determined that the 12-month bridge 
contract valued at $1.4 million would provide sufficient time to 
complete market research and other acquisition planning for the 
subsequent award. 

* In another instance, State awarded a competitive follow-on contract 
to provide operational and maintenance support services at the U.S. 
Embassy compound in Baghdad, Iraq, three months before the existing 
contract expired. However, the new contract, which was awarded to the 
incumbent vendor, was protested, thus preventing the contractor from 
starting performance on the contract. Citing concerns about the health 
and safety of 4,200 U.S. government personnel, State awarded a 6-month 
bridge contract valued at $38 million to the incumbent vendor to 
ensure continuity of services. The justification cited that 
transitioning to a contractor other than the incumbent vendor would 
take at least 90 days because of visa processing, among other things. 

* A USAID program for oversight, outreach, and legislative assistance 
to the National Assembly of Afghanistan was extended to ensure 
continued support to the Afghan parliament during the upcoming budget 
cycle. The contract USAID planned to use to obtain these services was 
not awarded in time. As a result, USAID awarded a 7-month bridge 
contract to the incumbent vendor with a value of $5 million to avoid a 
break in service, with the goal of awarding a competitive follow-on 
contract during the parliament's upcoming summer recess. USAID 
determined that for the bridge contract, a new vendor could not 
transition within the time available due to security clearances and 
other requirements. 

Justifications Generally Contained the Required Elements and Provided 
Varied Levels of Insight about the Risks that Led to Use of the 
Urgency Exception: 

Justifications in our sample generally contained the required 
information; however, some fell short of the FAR requirements and did 
not obtain the necessary signatures, among other things. Other 
justifications were written ambiguously in terms of including other 
facts supporting the use of the urgency exception, such as the nature 
of the harm to the government. 

Justifications Generally Contained the Required Elements, Yet Several 
Did Not Meet All FAR Requirements: 

Consistent with acquisition regulations, DOD, State, and USAID 
prepared written justifications for all of the 34 urgent contracts in 
our sample to include the required elements specified in the FAR--such 
as the contracting officer's determination that the cost will be fair 
and reasonable and the extent of the agencies' market research 
efforts. In addition, nearly all of the justifications that we 
reviewed were prepared and approved prior to award. The FAR permits 
agencies to prepare and approve justifications within a reasonable 
time after contract award when doing so prior to award would 
unreasonably delay the acquisition. This provision is unique to use of 
the urgency exception, as preparation and approval of the 
justification prior to award can delay the quick response time needed 
to meet urgent needs. Contracting officials told us that they work 
together with the program office to prepare justifications and, at a 
minimum, obtain verbal approvals when it is unlikely the justification 
can be routed to approving officials prior to award. 

In three instances, however, we found justifications were not signed 
by the appropriate approving authority as required by the FAR. For 
example, a USAID justification to award a $5 million contract to 
support missions in Afghanistan was not signed by the Competition 
Advocate due to an administrative oversight. In a second example, 
officials at the Defense Logistics Agency did not obtain the necessary 
written approvals justifying a $32 million award for an emergency fuel 
purchase also due to an administrative oversight; however, according 
to officials, verbal approvals had been obtained from all requisite 
approving officials including the head of the contracting activity 
prior to award. After we brought this to their attention, DLA 
officials obtained the necessary signatures on the justification for 
this contract, even though the contract was complete. The office that 
awarded this contract has since put a tool in place to route 
justifications and ensure appropriate signatures are obtained in a 
timely manner. Lastly, an Air Force justification for a noncompetitive 
award valued at $130 million was not signed by the Senior Procurement 
Executive, as required by the FAR. Officials we spoke with could not 
confirm the reason the procurement executive did not sign the 
justification and this individual is no longer employed by the Air 
Force. 

We also found four DOD justifications that were not signed in time to 
meet the FAR requirement to make them publicly available within 30 
days of award. While the FAR permits agencies to prepare and approve 
justifications awarded using the urgency exception within a reasonable 
time after award; it does not identify a specific timeframe to do so. 
However, agencies are required to make justifications for urgent 
noncompetitive contracts available on the FedBizOpps website within 30 
days of award.[Footnote 20] Thus, agencies would need to prepare and 
approve justifications within 30 days in order to meet FAR 
requirements to make them publicly available. DOD contracting 
officials who administered the awards included in our sample told us 
it is customary to obtain verbal approvals on justifications for 
noncompetitive procurements prior to award; but such justifications 
are not made publicly available without signatures from the 
appropriate approving official. The justifications for these contracts 
were not signed until 58 to 314 days after award, meaning that the 
fully approved justifications were not made publicly available within 
30 days of award as required by the FAR. In one of these cases, an 
Army justification for a 3-month noncompetitive award for satellite 
equipment was not prepared and approved, in writing, until 138 days 
after award. Citing concerns about compliance, the Army attorney who 
provided legal review of the justification noted the absence of 
regulatory procedure or agency policy when approval of the 
justification has far exceeded the timing requirements for making the 
justification publicly available. Officials subsequently posted the 
justification which occurred more than 6 months after the contract 
award date and 90 days after the contract expired. Some DOD, State, 
and USAID contracting officials we spoke with emphasized the 
importance of complying with the posting requirement to provide 
transparency into agency's contracting activity, but others were 
unsure of the appropriate course of action when approval of the 
justification does not occur within 30 days. 

For 15 of the justifications we reviewed, we could not confirm whether 
justifications were posted to the FedBizOpps website within the 
required timeframes, or at all, as no documentation was available. The 
FAR does not require agencies to maintain documentation that the 
justification was made publicly available; however, we found that in 
some instances, officials printed the confirmation page from the 
FedBizOpps website to document compliance with the requirement. After 
we brought this issue to their attention, officials subsequently 
posted five justifications. Some officials told us that justifications 
were not posted due to an administrative oversight. 

DOD, State, and USAID have developed guidance to implement FAR 
requirements for justifications for noncompetitive contracts; however, 
none of the agencies have included instructions addressing how staff 
should document compliance with the FAR requirement to make 
justifications publicly available or what to do when the justification 
is not approved and ready for posting within 30 days. USAID officials 
acknowledged the benefit of documenting that the justification was 
posted to demonstrate the posting requirement was met and told us they 
would include a process to do so in their guidance to contracting 
officers. Standards for Internal Control in the Federal Government 
states that internal controls--such as agency policies and procedures-
-are an integral part of an organization's management function that 
provides reasonable assurance of compliance with laws and regulations. 
Control activities include the creation and maintenance of records 
which provide evidence of implementation, such as documentation of 
transactions that is readily available for inspection.[Footnote 21] 
Contracting officials told us that documenting their efforts to make 
the justification publicly available provides transparency into the 
steps they took to comply with applicable regulations. 

Justifications Provided Varied Levels of Insight about Risks: 

Generally, justifications for the 34 contracts in our sample described 
the nature of the harm--serious financial or other risk--facing the 
government if the award were to be delayed using traditional 
competitive procedures. Some justifications were specific about the 
potential harm to the government while others were ambiguous. The FAR 
states that agencies may use the urgency exception when delay of the 
contract award would pose a serious injury--financial or other--to the 
government. The FAR further provides that agencies are to include 
other facts, such as data, estimated cost, or other rationale as to 
the extent and nature of the harm to the government --which provides 
some flexibility about how such risks should be described in the 
justification. 

Most of the justifications in our sample--23 of 34--quantified the 
potential harm to the government if the acquisition was delayed by 
using competitive procedures in terms of potential dollars lost or 
schedule delays. The Air Force and the Army have guidance for 
preparing justifications which states that the most critical aspect of 
justifications that cite use of the urgency exception is quantifying 
the nature of the serious injury to the government if the urgent 
requirement is competed.[Footnote 22] Accordingly, nearly all of the 
Air Force and Army justifications we reviewed estimated the potential 
costs to the government if the urgent award were to be delayed by 
using competitive procedures. For instance, one Air Force 
justification for an unmanned aerial system explained that no other 
vendors had mature technology and estimated that the effort of 
bringing at least one other vendor to an equivalent capability would 
cost $5.7 million and result in at least a 3-month delay. Further, the 
justification stated that it is unlikely these costs would be 
recovered through competition. Similarly, the justification for an 
Army contract to obtain new parts for tactical wheeled vehicles to 
help protect against attacks from improvised explosive devices 
estimated that DOD would incur $2.5 million in transportation costs if 
the parts were not acquired by a certain date to meet the time frame 
of a scheduled ship deployment. 

By contrast, 11 of the justifications we reviewed were more ambiguous 
in describing the nature of the harm if a noncompetitive contract was 
not awarded. Some of the ambiguous justifications described the 
following: 

* At Navy, justifications for four procurements to provide goods or 
services related to persistent ground surveillance systems cited that 
only one source was available as other sources would duplicate costs 
or cause delays. The justifications did not provide additional 
information about the potential time or dollars to be saved by using 
the urgency exception. 

* At State, one justification cited the need to award a noncompetitive 
contract using the urgency exception to provide telecommunications 
support for a meeting of foreign leaders. The justification emphasized 
the vendor's prior experience in providing similar services, thereby 
facilitating the agency's mission in the most cost-effective manner. 
But it did not provide additional information regarding the extent and 
nature of the harm posed to the government. For such events, according 
to agency officials, security concerns often hinder the agency's 
ability to conduct advanced planning; thus necessitating the use of 
the urgency exception. 

* Two USAID justifications did not fully describe the harm to the 
government. The justifications cited the need to comply with a 
requirement to conduct annual financial audits of local expenses 
incurred in Afghanistan; however, the extent and nature of the serious 
risk of financial or other injury to the government was not stated. 
Officials justified the noncompetitive award citing a shortage of 
qualified audit firms in Afghanistan which could affect USAID's 
ability to meet auditing requirements. Thus, awarding a noncompetitive 
contract would provide an opportunity to assess the audit capabilities 
of the selected contractor, develop a pool of acceptable audit firms 
to choose from thereby increasing competition for future procurements. 

Agencies Did Not Always Limit the Duration to 1 Year and Achieved 
Limited Competition in Selected Instances: 

The FAR limits the total period of performance of contracts awarded 
using the urgency exception to 1 year--unless a determination from the 
head of the agency is made that exceptional circumstances apply. This 
provides the time necessary to enter into another contract using 
competitive procedures, which reduces the risk of overspending. Within 
our sample of 34 contracts, nearly a third of the contracts--10--had a 
period of performance that was more than 1 year, either established at 
the time of award or during performance of the contract. Two of these 
contracts exceeded 1 year at award and the contracting officers did 
not obtain a determination from the head of the agency, as required by 
the FAR. The remaining eight contracts were extended beyond 1 year 
through subsequent modifications, which contracting officials 
considered separate contract actions that, in their view, would not 
require a determination by the head of the agency. Treating 
modifications to contracts awarded on the basis of urgency as separate 
rather than cumulative contract actions makes it harder for senior 
department officials to provide oversight over significant increases 
in contract cost. DOD, State, and USAID conducted limited competitions 
for 4 of the 34 contracts in our sample by using knowledge from recent 
competitions to solicit multiple bids. Lack of technical data rights 
and reliance on the expertise of the contractor limited the agencies' 
abilities to seek competition. 

Approaches Used to Extend Period of Performance Beyond 1 Year and to 
Increase Funding Diminish Oversight: 

We found that 10 of the 34 contracts in our sample had either a period 
of performance of more than 1 year at the time of award or, the period 
of performance was extended beyond 1 year during performance of the 
contract. The FAR provides that the contract period should be limited 
to the time required to meet the urgent need and for the agency to 
compete and award another contract for the required goods and 
services. In addition, contracts may not exceed more than 1 year 
unless the head of agency, or their designee, determines that 
exceptional circumstances apply. Limiting the length of noncompetitive 
awards under the urgency exception helps minimize the risk of 
overspending while providing sufficient time for the agency to enter 
into another contract using competitive procedures, according to 
officials from the OFPP--the office within OMB which provides 
governmentwide guidance on federal contracting. 

In 2 of the 10 cases, we found that DOD officials did not seek a 
determination from the head of the agency or appropriate designee, as 
required, for awards where it was known at time of award that the 
period of performance would be more than 1 year. In one of these 
instances at the Navy, the justification estimated a 9-month contract 
period; however, the award documents indicate a total period of 
performance of 17 months that included 5 months for delivery of 
upgraded radio kits to protect against attacks from improvised 
explosive devices followed by 12 months of engineering support 
services.[Footnote 23] Navy officials acknowledged that the period of 
performance at time of award was ambiguous and said they did not seek 
a determination because the terms and conditions of the contract had 
not yet been finalized at the time work began. In the other case at 
the Air Force, work on the contract began under a pre-contract cost 
agreement prior to the contract award date and the contract identifies 
the period of performance as beginning on the date the pre-contract 
cost agreement started. As a result, the period of performance at 
award was 13 months. Air Force officials told us they did not get the 
determination because the contract was expected to end within 12 
months of the award date and they did not consider the pre-contract 
cost agreement as part of the period of performance for the contract, 
contrary to the language in the contract. 

In the remaining eight instances, we found that DOD, State, and USAID 
used different approaches to modify the contracts to extend the period 
of performance beyond 1 year after the initial contract award. While 
the FAR clearly limits the period of performance to 1 year, it does 
not address whether the duration requirement applies only at the time 
of award or if the requirement applies to cases where the contract is 
modified to extend the period of performance after award. Contracting 
officials did not seek a determination of exceptional circumstances 
from the head of the agency or appropriate designee before extending 
the period of performance beyond 1 year. In four of the eight 
instances, officials extended the period of performance through 
contract modifications and no additional action was taken. For the 
remaining four instances, officials exercised a contract clause to 
extend the contract or prepared an additional justification to extend 
the contract beyond 1 year.[Footnote 24] 

Using a Contract Clause to Extend the Contract for 6 Months: 

In two of the eight cases, contracting officials extended the 
contracts beyond 1 year by using a contract clause that allows 
agencies to extend services up to 6 months within the limits and at 
the rates specified in the contract.[Footnote 25] For urgent, 
noncompetitive contracts where the 1 year duration requirement 
applies, the FAR is not clear about whether a determination of 
exceptional circumstances is necessary when using this clause results 
in the contract's period of performance exceeding a year. In one of 
the two cases, for example, State awarded a 1-year bridge contract (4 
month base contract with two 4 month options) to the incumbent vendor--
with an estimated value of $100 million--using the urgency exception 
to procure local guard services in Afghanistan. The bridge contract 
was intended to allow time for a new contractor--the awardee of a 
competitive award--to set up its operations to take over the 
performance of these services. However, during the bridge contract 
period of performance, State realized that the new awardee could not 
establish its operations to meet the timeframes required in the 
contract and therefore defaulted, leading to termination of the 
competitive award. To allow sufficient time to re-compete the 
requirement and transition to a new vendor, State used the contract 
clause to extend the existing bridge contract for an additional 6 
months but did not seek a determination of exceptional circumstances. 
The additional time increased the total period of performance to 18 
months and added $78 million to the contract value--which included 
retention bonuses to provide an incentive for guards to continue 
working in the event the contract was extended beyond 1 year. The 
contracting officer did not take into consideration whether using this 
clause would have any bearing on the requirement to seek a 
determination of exceptional circumstances for an urgency award 
exceeding 1 year. Contracting officials we spoke with maintained that 
an additional determination was not required because the terms of the 
contract included the clause to extend services. As a result, no 
additional oversight occurred when the contract's period of 
performance exceeded 1 year. 

Preparing an Additional Justification: 

In two of the eight cases, we found that contracting officials 
extended the period of performance beyond a year after award through 
the preparation of additional justifications for other than full and 
open competition. Contracting officials at DOD, State, and USAID 
stated their belief that urgency contracts could be extended without a 
determination of exceptional circumstances by the head of agency when 
using this approach. In their view, each additional justification 
represents an individual contract action; thus, there is no need to 
consider the cumulative effect of a modification resulting in a period 
of performance beyond 1 year.[Footnote 26] 

In one of these instances, the Army TACOM Life Cycle Management 
Command identified an urgent operational need for 513 medium armored 
security vehicles and related support--valued at more than $757 
million to support the Afghanistan National Army. To meet the 
timeframes for delivery, officials determined that the circumstances 
warranted use of a noncompetitive award on the basis of urgency to one 
contractor with prior experience on similar acquisitions. After 
identifying a multi-year requirement to provide vehicles to the 
Afghanistan National Army, contracting officials planned to fulfill 
the requirement in multiple phases. For the first phase, the Army 
decided to purchase 73 vehicles and prepared a noncompetitive 
justification citing the urgency exception for an award valued at 
$85.1 million--which is $0.4 million below the level that requires 
approval from the Senior Procurement Executive. The first phase was 
awarded in January 2011 as an undefinitized contract action which 
allows the contractor to start the work quickly without negotiating 
all the terms and conditions for a contract.[Footnote 27] However, 3 
months into the performance of the contract, another justification for 
a modification to the undefinitized contract action was approved by 
the Senior Procurement Executive using a different exception citing 
that only one responsible source could fulfill the procurement of the 
remaining 440 vehicles needed to meet the requirement. The additional 
justification for the second phase, valued at more than $576 million, 
added 3 years (a base year and two 1-year options); extending the 
procurement to 2014. According to the contracting officer, a 
determination from the head of the agency was not obtained as the 
second phase is considered a separate action rather than cumulative; 
thus the period of performance under the urgency justification would 
not exceed 1 year. Approving the requirement between two 
justifications allowed for the initial contract award to be within the 
1 year period of performance as required. However, when the contract 
exceeded a year with the subsequent modification on the grounds that 
only one source was capable; no additional oversight was performed by 
the head of the agency to determine if exceptional circumstances 
applied. See appendix 3 for additional information about the 10 
contracts in our sample where the period of performance was more than 
1 year. 

Limited Oversight of Urgent Contracts with Significant Cost Growth: 

In addition to extending the period of performance through the 
preparation of additional justifications, we found instances where 
agencies also increased funding on urgency contracts after award to 
well beyond the original contract value. For seven contracts in our 
sample, total obligations increased by more than 30 percent from the 
original estimate in the justification that was approved to award a 
noncompetitive contract using the urgency exception. In these cases 
where total obligations grew considerably, contracting officials did 
not alert senior procurement officials when these increases occurred. 
In one example, Navy officials modified a contract to provide training 
and other support services for a surveillance system several times 
which grew to more than three times the estimated value. The contract 
value at time of award was $30 million, and the justification was 
signed by the head of the procuring activity, as required by the FAR 
for awards greater than $12.5 million but not exceeding $85.5 million. 
However, after award, three modifications added a total of $31 million 
to the contract primarily due to cost overruns. Additionally, four 
modifications with accompanying justifications--because the work being 
added was determined to be outside the original scope of the contract-
-added $12 million each time, bringing the total contract value to 
more than $109 million, as illustrated in figure 5. 

Figure 5: Increases in Contract Value to Procure Training and Program 
Support for the Persistent Ground Surveillance System: 

[Refer to PDF for image: line graph and supporting information] 

Over $85.5 million – Senior procurement executive. 

April 8, 2011: Contract awarded sole source based on the urgency
exception; 
Cumulative cost: $30 million. 

September 27, 2011: Increase funding by $16.3 million due to cost 
overruns; 
Cumulative cost: $46.3 million. 

September 29, 2011: New justification prepared based on the only one
responsible source exception to add $12 million in funding; 
Cumulative cost: $58.4 million. 

December 15, 2011: New justification prepared based on the urgency 
exception to add $12 million in funding; 
Cumulative cost: $70.4 million. 

December 21, 2011: Increase funding by $12.1 million due to cost 
overruns; 
Cumulative cost: $82.5 million. 

January 13, 2012: New justification prepared based on the urgency 
exception to add $12 million in funding; 
Cumulative cost: $94.5 million. 

February 17, 2012: New justification prepared based on the urgency
exception to add $12 million in funding; 
Cumulative cost: $106.5 million. 

March 23, 2012: Increase funding by $2.6 million for extension of
the period of performance; 
Cumulative cost: $109.1 million. 

Source: GAO analysis of DOD contract documents. 

[End of figure] 

The four supplemental justifications were each approved by the 
competition advocate, as required. However, because each justification 
is contemplated individually without regard to the cumulative value of 
the contract, the senior procurement executive did not have an 
oversight mechanism to be made aware of the cost growth on this 
contract. If this contract had been estimated to be $109 million at 
the time of award, the senior procurement executive would have had 
oversight through approval of the justification. The FAR does not 
provide guidance to contracting officials on the degree of oversight 
senior agency officials should exercise when contract modifications 
significantly raise the cumulative dollar value of a contract awarded 
using the urgency exception. 

Using multiple modifications to increase funding or extend the period 
of performance and treating these as separate rather than cumulative 
contract actions make it harder for senior department officials to 
provide oversight. Competition advocates at DOD, State, and USAID had 
differing views about whether contract modifications to extend the 
period of performance should be considered cumulatively. Some thought 
the actions should be viewed cumulatively as it provides greater 
oversight; while others thought the actions should be considered 
independent of each other. OFPP officials told us that generally, the 
total period of performance of urgent contracts should be considered 
cumulatively either at time of award or when the contract is modified 
to extend the period of performance to more than 1 year. While OFPP 
officials stated that the period of performance should be considered 
cumulatively, the FAR does not specify what to do when these contracts 
are modified beyond 1 year, and no guidance is available on what to do 
in these situations. As the entity responsible for federal procurement 
policy, OFPP is best suited to clarify when determinations of 
exceptional circumstances are needed when extending the period of 
performance on an urgency contract beyond 1 year. Additionally, in the 
absence of an oversight mechanism for noncompetitive contracts awarded 
under the urgency exception with significant increases in value over 
time, senior procurement officials are not assured of the transparency 
necessary to help strengthen accountability for these situations. 
Standards for Internal Control in the Federal Government calls for 
organizations to maintain proper controls that ensure transparency and 
accountability for stewardship of government resources.[Footnote 28] 

Some Urgent Contracts Achieved Limited Competition, While Lack of 
Access to Technical Data Rights and Reliance on Contractor Expertise 
Thwarted Competition in Others: 

Even in urgent situations, agencies are required to seek offers from 
as many potential sources as practicable given the circumstances and 
some programs in our sample were able to use the prior expertise or 
market knowledge to hold limited competitions. For 4 of the 34 
contracts in our sample, DOD and State sought competition by seeking 
offers from firms with which the agency had prior experience through 
recent procurements and reasonably believed could perform the work in 
the time available. For example, to avoid an unanticipated disruption 
in supplying fuel to the government of Israel, DLA solicited four 
firms the agency had worked with on similar acquisitions in the past. 
In the justification, DLA cited that having the benefit of market 
information from prior competitive awards helped the agency reduce the 
time it would normally take to compete the new procurement. In another 
instance, State had an existing indefinite delivery indefinite 
quantity contract in place for the purchase of ballistic resistant 
doors for embassy security. During embassy renovations it was 
determined that the required specification could not be met through 
the negotiated terms of the existing contract. State officials 
conducted a limited competition among three vendors who were approved 
vendors under the existing contract. Further, State justified this 
limited competition as the preferred cost-effective method as these 
three vendors had been the lowest bidders on similar procurements, 
thus, limiting the risk of overspending. 

For 10 DOD contracts in our sample, the government was unable to 
compete requirements because of a lack of access to technical data 
packages or proprietary data coupled with the urgency of the 
requirement. In some instances, program officials explored the 
possibility of acquiring the data only to learn that the package was 
not available for sale or would be cost-prohibitive. In our prior 
work, DOD described the acquisition of technical data for weapon 
systems, such as design drawings and specifications as critical to 
enabling competition throughout a system's life cycle.[Footnote 29] 
Within our sample, we found in one instance where DLA was in the 
process of negotiating the purchase of the technical data, but the 
purchase could not be completed in a timeframe that would have allowed 
competition for the urgent requirement. While DLA was not able to 
benefit from the purchase of the technical data package for the 
current award, the agency would be better positioned to compete future 
procurements. For more than a decade we have reported on the 
limitations to competition when DOD does not purchase technical data 
rights and the increased costs as a result.[Footnote 30] In May 2013, 
DOD implemented guidance for program managers to consider acquiring 
technical data rights as part of the acquisition planning. 

In examining the procurement history for two contracts in our sample, 
we found one DOD program involving an aerostat, the Persistent Threat 
Detection System (PTDS) that spanned 10 years without achieving 
competition for the acquisition of the aerostat. The Army has awarded 
six noncompetitive contracts for the PTDS program since 2004 on the 
basis of urgency to the same contractor, as illustrated in figure 6. 
[Footnote 31] 

Figure 6: Time Line of Events to Procure the Aerostat for the 
Persistent Threat Detection System Program: 

[Refer to PDF for image: timeline] 

January 22, 2004: 
First Persistent Threat Detection System (PTDS) contract awarded sole 
source using the urgency exception. 

January 5, 2010: 
Second PTDS contract awarded sole source using the urgency exception. 

April 14, 2010: 
Third PTDS contract awarded sole source using the urgency exception. 

February 25, 2011: 
Fourth PTDS contract awarded sole source using the urgency exception. 

May 27, 2011: 
Fifth PTDS contract awarded sole source using the urgency exception. 

December 14, 2011: 
Sixth PTDS contract awarded sole source using the urgency exception. 

April 5, 2012: 
Army Senior Procurement Executive approves justification for fifth 
PTDS award, on the condition that all future buys be competed. By that 
time, the program was 4 months into the sixth sole source PTDS 
contract awarded on December 14, 2011. 

September 25, 2013: 
Seventh PTDS contract awarded sole source using the only one responsible
source exception. 

Source: GAO analysis of DOD contract documents. 

[End of figure] 

While awarding the fourth PTDS contract in February 2011, the Army 
identified six capable sources and determined that competition was 
viable for long-term non-urgent requirements. However, the Army 
determined that only one contractor with prior experience could 
satisfy the urgent requirement at that time. In May 2011, the Army 
awarded a noncompetitive urgency contract to that contractor for 29 
aerostats and cited the future need for spares in fiscal year 2012 
when additional funding would be available. The senior procurement 
executive approved the May 2011 urgency justification nearly a year 
after award--due to confusion about changes in the review process--on 
the condition that all future related procurements be competed. 
However, by the time that the senior procurement executive approved 
the justification for the May 2011 urgent award, the Army had already 
awarded the follow on urgent award for spares in December 2011. While 
the Army identified six sources that were capable of competing and 
providing the PTDS aerostat in 2011, it ultimately awarded a 3-year 
noncompetitive contract to the same contractor valued at $306 million 
on the basis of "only one responsible source" because the government 
did not own the technical data packages. Despite the recurring nature 
of the requirement, Army officials reported that it was difficult to 
plan for competition because each requirement was short term in nature. 

In 2013, DOD concurred with our recommendation to develop guidance to 
enable DOD components to apply lessons learned from past procurements 
to increase competition for the same goods and services.[Footnote 32] 
This recommendation was, in part, intended to help senior department 
officials capture the benefit of information on past procurements when 
approving individual justifications for subsequent noncompetitive 
awards. To address concerns about missed opportunities for learning 
why past acquisitions were not competed and to help remove barriers to 
competition in future procurements, in April 2013, the Air Force 
implemented a new policy to include justifications from predecessor 
acquisitions as a reference document to justification approving 
officials. Air Force officials observed that contracting officers were 
splitting requirements across multiple justifications at lower 
approval thresholds, which reduced oversight by higher level approving 
officials. The Navy has a similar policy in place and DLA officials 
told us they are planning to implement a similar process. The Army, 
which has added increased scrutiny of justifications particularly for 
urgency awards as one its goals for improving competition, is in the 
process of revising its guidance for preparing justifications to 
include a process similar to that of the Air Force. 

Conclusions: 

The benefits of competition--such as cost savings and improved 
contractor performance--in acquiring goods and services from the 
private sector are well documented. Awarding a noncompetitive contract 
on the basis of unusual and compelling urgency is necessary in select 
circumstances. However these contracts should be limited in duration 
to minimize the amount of time that the government is exposed to the 
risks of contracts that are awarded quickly without the benefits of 
competition. Mechanisms for transparency and oversight of these 
contracts--such as posting justifications publicly and a determination 
that exceptional circumstance apply to extend the contract period of 
performance beyond 1 year--are necessary to ensuring that they are 
used only in circumstances when no other option is available and to 
promote competition in the future. Transparency and oversight during 
performance of the contract, particularly when adding significant time 
or money, ensures that the government is making sound decisions in the 
best interest of taxpayers. In light of this, having OFPP provide 
guidance to clarify when determinations are needed when extending the 
period of performance on an urgency contract could help achieve 
consistent implementation of the duration requirement across the 
government. Additionally, having agencies develop mechanisms to ensure 
that senior procurement officials are made aware of noncompetitive 
contracts with significant increases in value, particularly those that 
were not initially approved at the senior procurement executive level, 
could help to increase transparency in noncompetitive awards and 
strengthen oversight. And finally, although the data show that DOD, 
State, and USAID buy a relatively small amount of goods and services 
noncompetitively on an urgent basis, maintaining reliable data is 
critical to ensuring that agencies can effectively manage the use of 
this exception. 

Recommendations for Executive Action: 

To help improve reporting of federal procurement data and strengthen 
oversight of contracts awarded on the basis of an unusual and 
compelling urgency, we recommend the Secretaries of Defense and State 
and the Administrator of the U.S. Agency for International Development 
take the following four actions: 

* Provide guidance to contracting staff on the correct procedures for 
accurately reporting competition data for contracts using simplified 
acquisition procedures that are awarded on an urgent basis and DOD 
should re-emphasize existing guidance. 

* Establish a process for documenting that justifications were posted 
in compliance with the requirements in the FAR. 

* Provide guidance to contracting staff on what actions to take when 
required signatures are not obtained in order to post the 
justifications within 30 days. 

* Develop an oversight mechanism when the cumulative value of 
noncompetitive contracts awarded on the basis of unusual and 
compelling urgency increases considerably beyond the initial contract 
award value. 

To help ensure consistent implementation of the FAR requirement to 
limit the period of performance for noncompetitive contracts using the 
unusual and compelling urgency exception, we recommend that the 
Director of the Office of Management and Budget, through the Office of 
Federal Procurement Policy, take the following action: 

* Provide guidance to clarify when determinations of exceptional 
circumstances are needed when a noncompetitive contract awarded on the 
basis of unusual and compelling urgency exceeds 1 year, either at time 
of award or modified after contract award. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD, State, USAID, and OMB for 
their review and comment. We received written comments from DOD, State 
and USAID, which are reproduced in appendices IV through VI. OMB 
provided comments via email. The agencies generally agreed with the 
recommendations and in most cases described planned actions in 
response. We also received technical comments from DOD, which we 
incorporated as appropriate. 

DOD concurred with three recommendations and partially concurred with 
one recommendation. In written comments, DOD stated that the Defense 
Procurement and Acquisition Policy (DPAP) office will issue guidance 
to the contracting activities to remind them of instructions on 
completing data fields in FPDS-NG for simplified acquisition 
procedures, and to clarify documentation related to posting of 
justifications and actions to take when approval signatures are not 
obtained within the 30-day posting requirement. These actions are 
responsive to three of our four recommendations. For the fourth 
recommendation, DOD's proposed action to issue guidance emphasizing 
that the cumulative value of a contract should be considered when 
obtaining approval to increase the value of a contract awarded under 
the urgency exception does not fully address our recommendation. 
Although this guidance could be helpful, the recommendation was to 
develop an oversight mechanism for when contracts awarded under the 
urgency exception increase in value considerably over the course of 
time. The oversight mechanism would provide higher level contracting 
officials with visibility into awards that grow in small dollar 
increments that do not meet the thresholds for a new justification. 
One example of how this mechanism could be implemented would be to 
require approval at a higher level when the cumulative contract value 
increases by a certain percentage. 

In written comments, State agreed with the recommendations, stating it 
will seek to implement them by August 30, 2014. State did not provide 
any further details on implementation plans. 

In its written response, USAID concurred with the recommendations, and 
outlined steps it will take in response to them, including assessing 
and updating current guidance, policy and training components. 

In an email response, OMB agreed that there is a need for 
clarification regarding the use of exceptional circumstance 
determinations when contracts awarded using the urgency exception 
exceed 1 year. These officials further noted that they intend to work 
with the FAR Council, which updates the FAR, to discuss the issues 
raised in the report about the current FAR language and the best way 
to address those issues. 

We are sending copies of this report to the Director of OMB, the 
Secretaries of Defense and State, and the Administrator of the U.S. 
Agency for International Development, and interested congressional 
committees. In addition, the report is available at no charge on the 
GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841 or martinb@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix VII. 

Signed by: 

Belva Martin: 
Director, Acquisition and Sourcing Management: 

List of Committees: 

The Honorable Richard Durbin: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Patrick Leahy: 
Chairman: 
The Honorable Lindsey Graham: 
Ranking Member: 
Subcommittee on State, Foreign Operations, and Related Programs: 
Committee on Appropriations: 
United States Senate: 

The Honorable Carl Levin: 
Chairman: 
The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Robert Menendez: 
Chairman: 
The Honorable Bob Corker: 
Ranking Member: 
Committee on Foreign Relations: 
United States Senate: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Tom Coburn: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Rodney Frelinghuysen: 
Chairman: 
The Honorable Pete Visclosky: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Kay Granger: 
Chairwoman: 
The Honorable Nita Lowey: 
Ranking Member: 
Subcommittee on State, Foreign Operations, and Related Programs: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Howard P. McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Ed Royce: 
Chairman: 
The Honorable Eliot Engel: 
Ranking Member: 
Committee on Foreign Affairs: 
House of Representatives: 

The Honorable Darrell Issa: 
Chairman: 
The Honorable Elijah E. Cummings: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives for this review were to examine (1) the pattern of use 
of the unusual and compelling urgency exception, including the range 
of goods and services acquired by the Departments of Defense (DOD) and 
State, and US Agency for International Development's (USAID); (2) the 
reasons that agencies awarded noncompetitive contracts on the basis of 
urgency and the extent to which justifications met requirements in the 
Federal Acquisition Regulation (FAR); and (3) the extent to which 
agencies limited the duration of the contract and achieved competition. 

To address these objectives, we used data in the Federal Procurement 
Data System-Next Generation (FPDS-NG), which is the government's 
procurement database, to identify DOD, State, and USAID obligations 
for noncompetitive contracts awarded using the unusual and compelling 
urgency exception. We selected a non-generalizable, random sample of 
62 contracts by using data from FPDS-NG to analyze which components 
within DOD, State, and USAID had the most obligations using the 
urgency exception for fiscal years 2011 and 2012, which, at the time, 
were the most recent fiscal years for which data was available. To 
narrow our focus on which contracts to include in our review, we 
identified the contracting offices within DOD, State, and USAID that 
had the largest total obligations for contracts reported as being 
awarded using the urgency exception under the "reason not competed" 
field in the FPDS-NG database. We then selected contracts that 
represented a mix of large and smaller dollar awards and types of 
products and services procured. Table 2 below shows the contracting 
offices and the number of contracts included in our review. 

Table 2: Contracting Offices and the Number of Contracts Reviewed: 

Agency: Air Force; 
Contracting Office: Air Force Materiel Command, Hanscom Air Force 
Base, Massachusetts; 
Number of contracts reviewed: 1. 

Contracting Office: Aeronautical Systems Center, Wright Patterson Air 
Force Base, Ohio; 
Number of contracts reviewed: 5. 

Contracting Office: Air Force Research Laboratory, Wright Patterson 
Air Force Base, Ohio; 
Number of contracts reviewed: 3. 

Agency: Army; 
Contracting Office: TACOM Life Cycle Management Command, Warren, 
Michigan; 
Number of contracts reviewed: 5. 

Contracting Office: Army Contracting Command-Aberdeen Proving Ground, 
Aberdeen, Maryland; 
Number of contracts reviewed: 6. 

Agency: Navy; 
Contracting Office: Naval Air Systems Command, Warfare Center Aircraft 
Division, Lakehurst, New Jersey; 
Number of contracts reviewed: 5. 

Contracting Office: Naval Sea Systems Command, Washington, D.C.; 
Number of contracts reviewed: 5. 

Agency: Defense Logistics Agency (DLA); 
Contracting Office: DLA-Energy, Fort Belvoir, Virginia; 
Number of contracts reviewed: 3. 

Contracting Office: DLA-Land and Maritime, Warren, Michigan; 
Number of contracts reviewed: 4. 

Agency: State; 
Contracting Office: Office of Acquisition Management, Arlington, 
Virginia; 
Number of contracts reviewed: 7. 

Contracting Office: American Embassy Brussels; 
Number of contracts reviewed: 6. 

Agency: USAID; 
Contracting Office: Office of Acquisition and Assistance, Afghanistan; 
Number of contracts reviewed: 4. 

Contracting Office: Office of Acquisition and Assistance, Washington, 
D.C.; 
Number of contracts reviewed: 1. 

Contracting Office: Office of Foreign Disaster Assistance, Washington, 
D.C.; 
Number of contracts reviewed: 1. 

Contracting Office: Office of Transition Initiatives, Washington, D.C.; 
Number of contracts reviewed: 6. 

Source: GAO analysis. 

[End of table] 

To assess patterns in DOD's, State's, and USAID's use of the unusual 
and compelling urgency exception to competition, we analyzed data from 
the Federal Procurement Data System-Next Generation (FPDS-NG). We 
included contracts and task orders coded as using the urgency 
exception under the field "reason not competed" from fiscal years 2010 
through 2012 which represented the time period after the requirement 
to limit the duration of urgent contracts went into effect and 
reflected the most current reliable data to show trends over time. We 
determined that a contract was miscoded if it was coded in FPDS-NG as 
being awarded under the urgency exception, but our analysis of the 
contract file documentation showed that the contract was awarded using 
other procedures--such as the streamlined procedures under the 
simplified acquisition threshold--generally $150,000--or other 
exceptions to full and open competition such as national security. We 
analyzed DOD, State, and USAID obligation data and the types of goods 
and services based on product code fields. We assessed the reliability 
of FPDS-NG data by (1) performing electronic testing of required data 
elements, (2) reviewing existing information about the data and the 
system that produced them; and (3) comparing reported data to 
information from contract files that we sampled. In our analysis we 
excluded awards that were below $150,000 because of the high 
likelihood that these procurements followed simplified acquisition 
procedures which are separate from the procedures that apply to the 
urgency exception. Taking this approach allowed us to account for 
known data limitations. Thus, we determined that the federal 
procurement data were sufficiently reliable to examine patterns in 
DOD's, State's, and USAID's use of the urgency exception. To compare 
use of the urgency exception versus other exceptions to full and open 
competition, we conducted an analysis of the other values listed under 
the "reason not competed" field. In addition, we reviewed FPDS-NG 
instructions to identify protocols for entering contract data in the 
database and interviewed DOD, State, and USAID contracting officials 
and FPDS-NG subject matter experts about their procedures and 
processes for entering data in the procurement database. 

To assess the reason that agencies awarded noncompetitive contracts on 
the basis of urgency and the extent to which justifications met FAR 
requirements, we performed an in depth review of contract files for 34 
selected contracts that we determined--based on our review of contract 
file documentation and interviews with contracting officials--were 
awarded using the unusual and compelling urgency exception. Of the 62 
contracts that we initially selected for our sample, we narrowed our 
analysis to 34 because 28 of the contracts were miscoded in FPDS-NG. 
For these 34 contracts, we reviewed contract file documentation such 
as acquisition plans, justifications and other documents agencies used 
to seek approval to limit competition on the selected contracts to 
determine agencies' rationale for using the urgency exception. We also 
reviewed DOD, State, and USAID guidance regarding the preparation and 
approval of justifications to use the urgency exception. Additionally, 
we reviewed the Federal Acquisition Regulation and reviewed agency 
policies and guidance to inform our analysis of the extent to which 
justifications met FAR requirements such as ensuring the 
justifications were signed by the appropriate individuals and made 
publicly available within the required timeframes. We compared 
agencies' policies and procedures with the Standards for Internal 
Control in the Federal Government which calls for documentation of 
transactions that is readily available for inspection, thus providing 
evidence of implementation.[Footnote 33] We interviewed contracting 
and acquisition policy officials, procurement attorneys, program 
officials, and competition advocates at DOD, State, and USAID to 
discuss the facts and circumstances regarding use of the urgency 
exception and agency policies and procedures to implement FAR 
requirements for publicly posting justifications: 

To determine the extent to which agencies complied with the FAR 
requirement to limit the total period of performance of a contract 
awarded using the urgency exception to no more than a year unless the 
head of the agency makes a determination of exceptional circumstances, 
we reviewed contract file documents for 34 selected contracts that we 
identified were awarded using the urgency exception. We also conducted 
legal research and interviewed contracting and acquisition policy 
officials at DOD, State, and USAID on the implementation of the 
duration requirement. We reviewed contract file documentation such as 
contract awards to determine the estimated period of performance. 
Further, we reviewed contract modifications and additional 
justifications prepared after award to determine the actual period of 
performance and action taken by the agencies when extending the period 
of performance for urgency contracts, such as preparing additional 
justifications for other than full and open or exercising the option 
to extend services. We also interviewed officials from the Office of 
Federal Procurement Policy within OMB to obtain their perspectives on 
the approaches that DOD, State, and USAID used to address the FAR 
requirement to limit the period of performance or obtain a 
determination from the head of the agency that exceptional 
circumstances necessitate a period of performance greater than 1 year. 
We also analyzed contract documents to identify instances where DOD, 
State, and USAID increased funding for the 34 contracts in our sample. 
We assessed the implications of inconsistent implementation of the FAR 
requirement to limit the period of performance of urgent contracts and 
the absence of an oversight mechanism to monitor increases in contract 
value against criteria in Standards for Internal Control in the 
Federal Government.[Footnote 34] These criteria call for organizations 
to maintain proper controls that ensure transparency and 
accountability for stewardship of resources. To determine the extent 
to which DOD, State and USAID achieved competition with the use of the 
urgency exception, we interviewed contracting officials and reviewed 
contract documents, such as acquisition plans and price negotiation 
memorandums, to identify the barriers to competition that agencies 
cited and, to assess the extent to which the agencies solicited offers 
from multiple vendors. 

We conducted this performance audit from March 2013 through March 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Summary of Contracts: 

Included in Our Sample: 

Of the 62 contracts included in our sample, we determined that 34 were 
awarded using the unusual and compelling urgency exception to 
competition. Table 3 below provides an overview of the contracts in 
our sample including the awarding agency, a description of the item 
procured and the total dollars obligated. In addition, the table 
highlights the circumstances that, according to the Departments of 
Defense (DOD) and State, and the US Agency for International 
Development (USAID), led to use of the urgency exception such as to 
avoid a gap in program support or meet an urgent operational need. 

Table 3: Summary of Contracts in Our Sample Awarded Under the Unusual 
and Compelling Urgency Exception: 

USAID: 

Item Procured: Parliamentary support to the Afghanistan National 
Assembly; 
Funds obligated (in millions): $4.9; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Financial audit services; 
Funds obligated (in millions): $0.2; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Financial audit services; 
Funds obligated (in millions): $0.2; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: Afghanistan. 

State: 

Item Procured: Guard protection services; 
Funds obligated (in millions): $178.1; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Ballistic resistant doors and window; 
Funds obligated (in millions): $0.5; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Radio and television security equipment; 
Funds obligated (in millions): $9.9; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Telecommunications and information technology services; 
Funds obligated (in millions): $0.2; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Operations and maintenance support services at the U.S. 
Embassy compound in Baghdad, Iraq; 
Funds obligated (in millions): $49.4; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Iraq. 

Air Force: 

Item Procured: Intelligence, surveillance and reconnaissance (ISR) 
airship; 
Funds obligated (in millions): $114.9; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: ISR unmanned aerial system; 
Funds obligated (in millions): $14.9; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Secure communications equipment for ISR airship; 
Funds obligated (in millions): $0.5; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Airborne system to protect against improvised explosive 
devices (IED); 
Funds obligated (in millions): $39.8; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan, Iraq. 

Item Procured: Professional support; 
Funds obligated (in millions): $1.7; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Engineering support; 
Funds obligated (in millions): $3.9; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: [Empty]. 

Army: 

Item Procured: Airborne radar equipment; 
Funds obligated (in millions): $338.6; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Information technology and telecommunications services; 
Funds obligated (in millions): $14.7; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan, Iraq. 

Item Procured: Spare parts for the Persistent Threat Detection System; 
Funds obligated (in millions): $47.0; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Armored security vehicles; 
Funds obligated (in millions): $525.4; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Equipment and accessories for tactical wheeled vehicles; 
Funds obligated (in millions): $16.0; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Rocket propelled grenade net kits for tactical wheeled 
vehicles; 
Funds obligated (in millions): $59.4; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Production of tactical wheeled vehicles; 
Funds obligated (in millions): $177.6; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Management Support; 
Funds obligated (in millions): $104.4; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan, Iraq. 

Item Procured: Personal armor; 
Funds obligated (in millions): $4.4; 
Contract Awarded to Meet an Urgent Operational Need; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Navy: 

Item Procured: Vehicle-mounted counter-IED system; 
Funds obligated (in millions): $12.0; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan, Iraq. 

Item Procured: Mine identification and neutralization device; 
Funds obligated (in millions): $48.2; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Ground Fault Interrupter for sonar system; 
Funds obligated (in millions): $1.0; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Operational support for the Persistent Ground 
Surveillance System (PGSS); 
Funds obligated (in millions): $105.8; 
Contract Awarded to Meet an Urgent Operational Need; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: PGSS spare parts and logistics support; 
Funds obligated (in millions): $26.4; 
Contract Awarded to Meet an Urgent Operational Need; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: Program support for PGSS operators; 
Funds obligated (in millions): $6.4; 
Contract Awarded to Meet an Urgent Operational Need; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Item Procured: PGSS program support; 
Funds obligated (in millions): $44.6; 
Contract Awarded to Meet an Urgent Operational Need; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Defense Logistics Agency: 

Item Procured: Fuel; 
Funds obligated (in millions): $31.8; 
Contract Awarded to meet other urgent needs[A; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Jet fuel; 
Funds obligated (in millions): $69.7; 
Contract Awarded to Avoid a gap in programming; 
Support missions in Afghanistan or Iraq: [Empty]. 

Item Procured: Vehicle accessories for tactical wheeled vehicles; 
Funds obligated (in millions): $4.7; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: Afghanistan, Iraq. 

Item Procured: Automatic fire extinguishing systems for tactical 
wheeled vehicles; 
Funds obligated (in millions): $6.3; 
Contract Awarded to meet other urgent needs[A]; 
Support missions in Afghanistan or Iraq: Afghanistan. 

Source: GAO analysis of contract documents. 

[A] Other urgent needs include non-recurring urgent needs such as, 
construction of temporary work spaces, an unexpected break in oil 
refinery production, or support for a one time military mission. 

[End of table] 

[End of section] 

Appendix III: DOD, State, and USAID Contracts That Exceeded 1 Year: 

Figure 7 highlights the items procured and the estimated versus actual 
duration of the 10 contracts we found with a period of performance of 
more than 1 year. 

Figure 7: Period of Performance for Contracts that Exceeded 1 Year: 

[Refer to PDF for image: illustrated table] 

Agency: State; 
Contract: Guard protection services; 
Contract duration: 
Estimate: 12 months; 
Actual: 18 months. 

Agency: USAID; 
Contract: Education and training services; 
Contract duration: 
Estimate: 7 months; 
Actual: 16 months. 

Agency: Air Force; 
Contract: Intelligence, surveillance and reconnaissance airship; 
Contract duration: 
Estimate: 10 months; 
Actual: 20 months. 

Agency: Air Force; 
Contract: Intelligence, surveillance and reconnaissance unmanned 
aerial system; 
Contract duration: 
Estimate: 13 months; 
Actual: 26 months. 

Agency: Army; 
Contract: Program support; 
Contract duration: 
Estimate: 10 months; 
Actual: 18 months. 

Agency: Army; 
Contract: Tactical wheeled vehicle upgrade kits; 
Contract duration: 
Estimate: 10 months; 
Actual: 21 months. 

Agency: Army; 
Contract: Tactical wheeled vehicle modification; 
Contract duration: 
Estimate: 5 months; 
Actual: 16 months. 

Agency: Army; 
Contract: Armored vehicles; 
Contract duration: 
Estimate: 12 months; 
Actual: 40 months. 

Agency: Navy; 
Contract: Mine detection system; 
Contract duration: 
Estimate: 12 months; 
Actual: 22 months. 

Agency: Navy; 
Contract: Vehicle mounted counter-improvised explosive device kits; 
Contract duration: 
Estimate: 7 months; 
Actual: 17 months. 

Source: GAO analysis of DOD contract documents. 

[A] This undefinitized contract action had an estimated period of 
performance of 17 months at award. When definitized, the contract 
duration was shortened to 7 months. 

[End of figure] 

[End of section] 

Appendix IV: Comments from the Department of Defense: 

Office of The Under Secretary Of Defense: 
Acquisition, Technology and Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

Ms. Belva M. Martin: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Ms. Martin: 

This is the Department of Defense (000) response to the Government 
Accountability Office (GAO) Draft Report, GAO-14-304, "Federal 
Contracting: Noncompetitive Contracts Based on Urgency Need Additional 
Oversight," dated February 20, 2014 (GAO Code 121124). Detailed 
comments on the report recommendations are enclosed. 

Sincerely, 

Signed by: 

Richard Ginman: 
Director, Defense Procurement and Acquisition Policy: 

Enclosure: As stated. 

GAO Draft Report Dated February 20, 2014: 
GAO-14-304 (GAO Code 121124): 

"Federal Contracting: Noncompetitive Contracts Based On Urgency Need 
Additional Oversight," 

Department Of Defense Comments To The GAO Recommendation: 

Recommendation 1: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, the Government Accountability Office 
(GAO) recommends the Secretaries of Defense and State and the 
Administrator of the U.S. Agency for International Development provide 
guidance to contracting staff on the correct procedures for accurately 
reporting competition data for contracts using simplified acquisition 
procedures that are awarded on an urgent basis and DoD should 
reemphasize guidance. 

DoD Response: Concur. Defense Procurement and Acquisition Policy 
(DPAP) will issue guidance to contracting activities reminding them of 
the Defense Federal Acquisition Regulation Supplement (DF ARS) and 
Procedures, Guidance, and Information (PG!) Section 204.6, Contract
Reporting, which provides detailed instructions for completing each 
data field in the contract action report of the Federal Procurement 
Data System, including competition data for contracts using simplified 
acquisition procedures. 

Recommendation 2: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, the GAO recommends the Secretaries of 
Defense and State and the Administrator of the U.S. Agency for 
International Development establish a process for documenting that 
justifications were posted in compliance with the requirements in the 
FAR. 

DoD Response: Partially concur. The process exists, however, DPAP will 
issue guidance to clarify how contracting officers are to document the 
posting of Justification and Approvals (J&As) to demonstrate 
compliance with the requirements of FAR 6.305 - Availability of the
Justification. 

Recommendation 3: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, the GAO recommends the Secretaries of 
Defense and State and the Administrator of the U.S. Agency for 
International Development provide guidance to contracting staff on 
what actions to take when required signatures are not obtained in 
order to post the justifications within 30 days. 

DoD Response: Concur. DPAP will issue guidance to contracting 
activities reminding them of the requirements of FAR 6.303 - 
Justifications, and FAR 6.304 - Approval of Justifications; and
advising what actions to take when approval signatures are not 
obtained in within the 30 day posting requirement. 

Recommendation 4: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, the GAO recommends the Secretaries of 
Defense and State and the Administrator of the U.S. Agency for 
International Development develop an oversight mechanism when the 
cumulative value of noncompetitive contacts awarded on the basis of 
unusual and compelling urgency increases significantly beyond the 
initial contract award value. 

DoD Response: Concur. DPAP will issue guidance to contracting 
activities emphasizing the cumulative value of a contract should be 
considered when obtaining approval to increase the value of 
noncompetitive contracts initially awarded under the authority of FAR 
6.302-2, Unusual and Compelling Urgency. 

[End of section] 

Appendix V: Comments from the Department of State: 

United Stales Department of State: 
Comptroller: 
P.O. Box 150008: 
Charleston, SC 29415-5008: 

March 17, 2014: 

Dr. Loren Yager: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Dr. Yager: 

We appreciate the opportunity to review your draft report, "Federal 
Contracting: Noncompetitive Contracts Based on Urgency Need Additional 
Oversight" GAO Job Code 121124. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact
Eric Moore, Director, Bureau of Administration at (703) 875-4079. 

Sincerely, 

Signed by: 

James L. Millette: 

cc: GAO - Belva Martin: 
A - Joyce A. Barr: 
State/OIG - Norman Brown: 

Department of State Comments to GAO Draft Report: 

Federal Contracting: Noncompetitive Contracts Based on Urgency Need
Additional Oversight (GAO-14-304, GAO Code 121124): 

The Department of State appreciates the opportunity to comment on GAO's
draft report "Federal Contracting: Noncompetitive Contracts Based on 
Urgency Need Additional Oversight." 

GAO Recommendations: Provide guidance to contracting staff on the
correct procedures for accurately reporting competition data for 
contracts using simplified acquisition procedures that are awarded on 
an urgent basis and DOD should reemphasize existing guidance. 
Establish a process for documenting that justifications were posted in 
compliance with the requirements in the FAR. Provide guidance to 
contracting staff on what actions to take when required signatures are 
not obtained in order to post the justification within 30 days. 
Develop an oversight mechanism when the cumulative value of 
noncompetitive contracts awarded on the basis of unusual and 
compelling urgency increases significantly beyond the initial contract 
award value. 

Department Response: Concur- The Department of State agrees the 
recommendations in this report are prudent and will seek to implement 
them all by August 30, 2014. 

[End of section] 

Appendix VI: Comments from the U.S. Agency for International 
Development: 

USAID: 
From The American People: 

Belva Martin: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Ms. Martin: 

I am pleased to provide USAID's formal response to the Government 
Accountability Office (GAO) draft report entitled, "Federal 
Contracting: Noncompetitive Contracts Based on Urgency Need Additional 
Oversight" (GAO-14-304). 

This letter, together with the enclosed USAID comments, is provided 
for incorporation as an appendix to the final report. 

Thank you for the opportunity to respond to the GAO draft report and 
for the courtesies extended by your staff in the conduct of this audit 
review. 

Sincerely, 

Signed by: 

Angelique M. Crumbly: 
Assistant Administrator: 
Bureau for Management: 
U.S. Agency for International Development: 

Enclosure: a/s. 

USAID Comments On GAO Draft Report No. GAO-14-304: 

The following sections reflect USAID's formal response to the 
Govel11ment Accountability Office (GAO) draft report, entitled 
"Federal Contracting: Noncompetitive Contracts Based on Urgency Need 
Additional Oversight" (GAO-14-304). 

Recommendation 1: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, we recommend the Secretaries of 
Defense and State and the Administrator of U.S. Agency for 
International Development take action to provide guidance to 
contracting staff on the correct procedures for accurately reporting 
competition data for contracts using simplified acquisition procedures 
that are awarded on an urgent basis and DOD should reemphasize 
guidance. 

USAID agrees that it is prudent to take action to ensure it is 
reporting as accurately as possible all federal procurement data 
related to using simplified acquisition procedures that are awarded
on an urgent basis. USAID will take action in the form of assessing 
its current guidance provided to its contracting officer workforce. 
USAID will additionally update guidance, policy and training 
components to address any issues related to existing guidance and to 
improve procedures to more accurately report competition data for 
contracts using simplified acquisition procedures that are awarded on 
an urgent basis. 

Recommendation 2: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, we recommend the Secretaries of 
Defense and State and the Administrator of U.S. Agency for 
International Development take action to establish a process for 
documenting that justifications were posted in compliance with the 
requirements in the FAR. 

USAID concurs that the reporting of federal procurement data and 
proper oversight of contracts are paramount as a steward of the 
taxpayer dollar. USAID will take measures to reassess its current 
processes for documenting the justifications it records, processes and 
posts for those contracts awarded on the basis of an unusual and 
compelling urgency. USAID will further address its processes to ensure 
that when using these justifications that it is in compliance with
the requirements established in the FAR. 

Recommendation 3: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, we recommend the Secretaries of 
Defense and State and the Administrator of U.S. Agency for 
International Development take action to provide guidance to 
contracting staff on what actions to take when required signatures are 
not obtained in order to post the justifications within 30 days. 

USAID will conduct an assessment of its current guidance and policy as 
it relates to communicating with its contracting staff specific to 
actions to take when required signature(s) are not obtained in order 
to post the justifications within 30 days. Based on the conduct of its
assessment, USAID will update any guidance and associated policy to 
inform its contracting staff on required actions when signatures are 
not obtained to post a justification within the required 30 days. 

Recommendation 4: To help improve reporting of federal procurement 
data and strengthen oversight of contracts awarded on the basis of an 
unusual and compelling urgency, we recommend the Secretaries of 
Defense and State and the Administrator of U.S. Agency for 
International Development take action to develop an oversight 
mechanism when the cumulative value of noncompetitive contracts 
awarded on the basis of unusual and compelling urgency increases 
significantly beyond the initial contract award. 

USAID concurs with this recommendation and agrees that internal 
assessments of mechanism(s) of oversight on noncompetitive contracts 
are crucial for all international development agencies. However, the 
section of the GAO report specific to this recommendation with the 
heading of "Limited oversight of urgent contracts with significant 
cost growth", did not specifically identify USAID nor mention USAID as 
an agency that conducts this practice. USAID will of course take this 
recommendation under advisement and will work to comply within the 
approved framework. 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Belva Martin, (202) 512-4841 or martinb@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Tatiana Winger, Assistant 
Director and Candice Wright, analyst-in-charge, managed this review. 
MacKenzie Cooper, Beth Reed Fritts, and Erin Stockdale made 
significant contributions to the work. Julia Kennon and Alyssa Weir 
provided FPDS-NG data analysis expertise and legal support, 
respectively. Roxanna Sun provided graphics support. 

[End of section] 

Footnotes: 

[1] Contracts awarded on the basis of an unusual and compelling 
urgency where the government may limit the number of sources from 
which it solicits bids or proposals are considered noncompetitive 
contracts. For the purposes of this report we refer to the unusual and 
compelling urgency exception to full and open competition as the 
urgency exception. We use the term limited competition to refer to 
situations when the government seeks offers from as many potential 
sources as is practical under the circumstances when using the urgency 
exception. 

[2] 74 Fed. Reg. 52,849 (Oct. 14, 2009). In 2008, the Duncan Hunter 
National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 
110-417, § 862, amended certain laws to require that contracts awarded 
using the urgency exception not exceed the time necessary to meet the 
unusual and compelling requirements and for the agency to enter into 
another contract, and may not exceed 1 year unless the head of the 
agency determines exceptional circumstances apply. The 2009 FAR 
amendment implemented this requirement. 

[3] H.R. Rep. No. 112-705, at 817 (2012) (Conf. Rep.). 

[4] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[5] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[6] Pub. L. No. 98-369, §§ 2711(a)(1) and 2723(a)(1), codified as 
amended at 41 U.S.C. § 3304 and 10 U.S.C. § 2304. 

[7] In all, there are seven exceptions to full and open competition. 
See FAR § 6.302. 

[8] Justifications are also to be posted to the procuring agency's 
website which may link to FedBizOpps. For most of the other exceptions 
to competition, justifications are to be published within 14 days of 
contract award. 

[9] For example, urgency, exclusive licensing agreements, brand name 
or industrial mobilization. FAR 13.106-1(b)(1)(i). 

[10] In our analysis we excluded awards that were below $150,000 
because of the high likelihood that these procurements followed 
simplified acquisition procedures, which are separate from the 
procedures that apply to the urgency exception. 

[11] Two of the contracts provided guard services to protect the U.S. 
embassies in Iraq and Afghanistan, while the third provided 
administrative support services to the National Visa Center. 

[12] U.S. Agency for International Development Acquisition Regulation, 
§ 706.302-70. 

[13] We have previously reported on data reliability issues with FPDS-
NG. See, e.g., GAO, Federal Contracting: Observations on the 
Government's Contracting Data Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29, 
2009); Improvements Needed to the Federal Procurement Data System-Next 
Generation, [hyperlink, http://www.gao.gov/products/GAO-05-960R] 
(Washington, D.C.: Sept. 27, 2005). 

[14] Going forward in this report, our analysis does not include the 
28 contracts that were miscoded. 

[15] Interim DOD Instruction 5000.02, "Operation of the Defense 
Acquisition System" (Nov. 25, 2013) and DOD "Acquisition Actions in 
Support of Joint Urgent Operational Needs" (Mar. 29, 2010). 

[16] GAO, Urgent Warfighter Needs: Opportunities Exist to Expedite 
Development and Fielding of Joint Capabilities, [hyperlink, 
http://www.gao.gov/products/GAO-12-385] (Washington, D.C.: Apr. 24, 
2012). 

[17] GAO, Defense Acquisitions: Future Aerostat and Airship Investment 
Decisions Drive Oversight and Coordination Needs, [hyperlink, 
http://www.gao.gov/products/GAO-13-81] (Washington, D.C.: Oct. 23, 
2012). DOD, Office of the Inspector General, Air Force and Army Corps 
of Engineers Improperly Managed the Award of Contracts for the Blue 
Devil Block 2 Persistent Surveillance System (Sept. 19, 2013). 

[18] [hyperlink, http://www.gao.gov/products/GAO-13-81]. 

[19] [hyperlink, http://www.gao.gov/products/GAO-12-385]. 

[20] In general, justifications for the other exceptions to full and 
open competition must be posted within 14 days of award. 

[21] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[22] The Army has draft guidance which is in the final stages of 
review. 

[23] The contractor completed the work in less than 1 year; however, a 
determination from the head of the agency would still have been 
required at the time of contract award because the undefinitized 
contract appears to have had a period of performance of more than 1 
year. 

[24] These extensions of contract performance are not exclusive to 
urgency contracts. 

[25] FAR 52.217-8 "Option to Extend Services" is included in 
solicitations and contracts for services when the inclusion of an 
option is appropriate. 

[26] Modifications that are outside the original scope of the contract-
-such as changes to requirements, quantities and period performance--
must comply with competition requirements--and agencies must prepare 
justifications for other than full and open competition. See, e.g., 
Neal R. Gross & Co., Inc., B-237434, Feb. 23, 1990, 90-1 CPD ¶ 212 at 
2-3. 

[27] GAO has previously reported on the risks associated with 
undefinitized contract actions, which authorize DOD contractors to 
begin work before reaching a final agreement on contract terms and 
must be definitized within certain parameters described in DOD 
regulation. See GAO, Defense Contracting: DOD Has Enhanced Insight 
into Undefinitized Contract Action Use, but Management at Local 
Commands Needs Improvement, [hyperlink, 
http://www.gao.gov/products/GAO-10-299] (Washington, D.C.: Jan. 28, 
2010). 

[28] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[29] GAO, Defense Acquisitions: DOD Efforts to Adopt Open Systems for 
Its Unmanned Aircraft Systems Have Progressed Slowly, [hyperlink, 
http://www.gao.gov/products/GAO-13-651], (Washington D.C.: July 31, 
2013) 

[30] GAO, Defense Management: Opportunities to Enhance the 
Implementation of Performance-Based Logistics, [hyperlink, 
http://www.gao.gov/products/GAO-04-715] (Washington, D.C.: Aug. 16, 
2004); Weapons Acquisition: DOD Should Strengthen Policies for 
Assessing Technical Data Needs to Support Weapons Systems, [hyperlink, 
http://www.gao.gov/products/GAO-06-839] (Washington, D.C.: July 14, 
2006); and Defense Acquisition: DOD Should Clarify Requirements for 
Assessing and Documenting Technical-Data Needs, [hyperlink, 
http://www.gao.gov/products/GAO-11-469] (Washington, D.C.: May 11, 
2011). 

[31] The PTDS program has competitively awarded three contracts to 
procure operators for the aerostat since 2006. These three contracts 
were awarded to the same contractor. 

[32] GAO, Defense Contracting: Actions Needed to Increase Competition, 
[hyperlink, http://www.gao.gov/products/GAO-13-325] (Washington, D.C.: 
March 28, 2013). 

[33] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[34] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[End of section] 

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