Contract Management:

Agencies Are Not Maximizing Opportunities for Competition or Savings under Blanket Purchase Agreements despite Significant Increase in Usage

GAO-09-792: Published: Sep 9, 2009. Publicly Released: Oct 9, 2009.

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The Federal Acquisition Regulation (FAR) allows agencies to establish blanket purchase agreements (BPA) under the General Services Administration's (GSA) Schedules Program, where contracts are awarded to multiple vendors for commercial goods and services and made available for agency use. BPAs are agreements between agencies and vendors with terms in place for future use; funds are obligated when orders are placed. When establishing BPAs under schedule contracts, agencies must follow procedures regarding the number of vendors considered, request discounts, and conduct annual reviews in accordance with requirements. This report assesses selected agencies' use of schedule BPAs and evaluates whether they considered more than one vendor when establishing BPAs and placing orders under them, took opportunities for savings, and conducted annual reviews. To conduct this work, GAO reviewed a sample of 336 schedule BPAs and 352 fiscal year 2007 orders and met with officials.

In fiscal year 2008, civilian agencies obligated $3.2 billion under schedule BPAs--up 383 percent from fiscal year 2004. GAO estimates that DOD's obligations ranged from $0.5 to $4.7 billion, placing total obligations in 2008 between $3.7 and $7.9 billion. GAO was unable to determine more fully DOD's obligations because DOD does not utilize fields in the federal procurement data system to distinguish schedule BPAs from other BPAs. DOD has begun to take actions to address this issue. Civilian agencies' use of BPAs for services grew significantly faster--475 percent--than their overall services contracting between 2004 and 2008. Contracting officers use BPAs for flexibility and speed, noting, for example, advantages in disaster response preparation and when funding for a fiscal year is unknown. Of the BPAs GAO reviewed, 64 percent had been competed--meaning, for purposes of this report, that more than one vendor was considered--when established. For 12 percent of BPAs that had not been competed, contracting officers provided a variety of justifications, some of which appear inconsistent with sound procurement policy. The FAR is not clear about justification requirements for BPAs awarded with limited competition, including to one vendor. Also, the majority of BPAs had been awarded to a single vendor, which resulted in a lack of competition when placing orders because the FAR does not currently require competition of orders under single award BPAs. Multiple award BPAs--awarded to more than one vendor for the same requirement--provide an opportunity to benefit from further competition when placing orders, but many contracting officers placed orders directly with one vendor without further competition. Congress recently enhanced competition requirements for multiple award contracts, but the application of this requirement to schedule BPAs has not yet been established. Some of the BPAs GAO reviewed had lengthy durations, exceeding 5 years. GAO found no evidence that agencies sought discounts when 47 percent of the BPAs reviewed were established. In the other cases, some contracting officers explicitly requested, or even demanded, discounts, while others merely encouraged them. Agencies frequently received discounts when they requested them. For instance, the Justice Department was able to save $20 million under a BPA where the contracting officer requested and received discounts. However, at times, such opportunities were missed when discounts were not requested, even when the estimated amount of the BPA was in the hundreds of millions of dollars. Contracting officials rarely conducted the required annual reviews. The reviews for only 19 of the 320 BPAs that required them addressed all of the FAR elements. By not conducting annual reviews, agencies miss opportunities for savings and can run the risk of violating competition requirements. One contracting officer was unaware that the underlying GSA schedule contract had expired, and orders continued to be placed under the BPA--a potential violation of the Competition in Contracting Act.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In providing comments on this report, the agency concurred with this recommendation and has since revised its website to include guidance agencies can use when requesting discounted pricing on BPAs.

    Recommendation: To assist federal agencies in requesting and obtaining discounts when establishing schedule BPAs, the GSA Administrator should include in the guidance on GSA's Web site specific language which agencies can use in their requests for quotation to clearly request discounted pricing when establishing schedule BPAs.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: In December 2009, the Office of Federal Procurement Policy issued a memorandum to the chief acquisition officers and senior procurement executives of federal agencies that included steps for agencies to take to better maximize the potential for savings under blanket purchase agreements. Specifically, the memo directs agencies to review blanket purchase agreements at least annually, in accordance with requirements in the Federal Acquisition Regulation and to not place orders under a blanket purchase agreement after the annual anniversary of its establishment until the agency conducts and documents its annual review.

    Recommendation: To improve compliance with the FAR requirement to conduct annual reviews of schedule BPAs, increasing opportunities for additional savings and avoiding violations of competition rules, the Administrator of the Office of Federal Procurement Policy should take steps to require federal agencies to put procedures in place to ensure that annual reviews are conducted.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

  3. Status: Closed - Implemented

    Comments: The Office of Federal Procurement Policy issued a rule implementing changes to the Federal Acquisition Regulation that clarifies the specific circumstances in which the establishment of a schedule--Blanket Purchase Agreements (BPA)--using the limited sources justifications of Federal Acquisition Subpart 8.405-6 is appropriate.

    Recommendation: To ensure that federal agencies take greater advantage of the opportunities that competition provides under schedule BPAs, the Administrator of the Office of Federal Procurement Policy should take steps to amend the FAR to clarify when establishing a schedule BPA using the limited source justifications of the FAR, including when to only one vendor, is or is not appropriate.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

  4. Status: Closed - Implemented

    Comments: The Office of Federal Procurement Policy issued a rule implementing changes to the Federal Acquisition Regulation that requires agencies to provide an opportunity for multiple-award schedule Blanket Purchase Agreements (BPA) holders to compete for the award of orders above the simplified acquisition threshold.

    Recommendation: To ensure that federal agencies take greater advantage of the opportunities that competition provides under schedule BPAs, the Administrator of the Office of Federal Procurement Policy should consider including in the pending proposed FAR rule that implements the provisions of section 863 of the National Defense Authorization Act of 2009 an amendment to FAR 8.4 specifying that the requirement to place on a competitive basis any order above the simplified acquisition threshold (generally $100,000) under multiple award contracts also applies to orders under single and multiple award BPAs.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

 

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