Federal Contracting: Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts
Highlights
What GAO Found
The National Defense Authorization Act (NDAA) for Fiscal Year 2010 required that the Federal Acquisition Regulation (FAR) be amended within 180 days after enactment to require justifications for 8(a) sole-source contracts over $20 million. These justifications bring more attention to large 8(a) sole source contracts. The FAR Council, which updates the FAR, missed this mandatory deadline by almost 325 days. During this delay, based on data in the Federal Procurement Data System-Next Generation (FPDS-NG), 42 sole-source 8(a) contracts with reported values over $20 million, totaling over $2.3 billion, were awarded without being subject to a justification. Office of Federal Procurement Policy (OFPP) representatives involved with the FAR Council's implementation of this rule attributed the delay primarily to the time required to establish a process for consulting with Indian Tribes and Alaska Native Corporations.
From October 28, 2009, through March 31, 2012, agencies reported awarding 72 sole-source 8(a) contracts over $20 million. GAO also analyzed trend information in FPDS-NG from fiscal year 2008 through fiscal year 2011 (the most current available information), which showed that the number and value of these contracts declined significantly in 2011. While GAO determined that FPDS-NG data was sufficiently reliable for the purposes of this review, GAO found errors, such as contracts with an implausible reported value of zero.
GAO found a slow start to implementation of the new justification requirement. Of the 14 sole-source 8(a) contracts awarded since the FAR was revised, only three included an 8(a) justification. The agencies awarding the remaining 11 contracts did not comply, either because contracting officials were not aware of the justification requirement or because they were confused about what the FAR required. For example, contracting officials were confused in one instance where another justification was already in place that covered multiple contracts. Further, the Small Business Administration (SBA) cannot accept a contract over $20 million for negotiation under the 8(a) program unless the procuring agency has completed a justification, but GAO found that SBA did not have a process in place to confirm the presence of a justification.
Why GAO Did This Study
SBA's 8(a) program is the government's primary means of developing small businesses owned by socially and economically disadvantaged individuals, including firms owned by Alaska Native Corporations and Indian tribes. The NDAA for Fiscal Year 2010, enacted on October 28, 2009, called for revisions to the FAR to provide for a written justification for sole-source 8(a) contracts over $20 million, where previously justifications were not required. GAO determined (1) the timeliness with which this new justification requirement was incorporated in the FAR; (2) the number of 8(a) sole-source contracts valued over $20 million that have been awarded since October 2009 and trends over time; and (3) the extent to which agencies have implemented this new justification requirement. GAO analyzed federal procurement data, reviewed the 14 contracts subject to the requirement across five federal agencies, and interviewed officials from OFPP, SBA, the Department of Defense, and other agencies.
Recommendations
GAO recommends that OFPP issue guidance to clarify the circumstances in which an 8(a) justification is required. GAO also recommends that the General Services Administration--which operates FPDS-NG--implement controls in FPDS-NG to help ensure that contract values are accurately recorded, and that SBA take steps to ensure that its staff confirm the presence of justifications. OFPP and GSA generally agreed with the recommendations. SBA indicated it would take some actions but did not fully address the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Federal Procurement Policy | To help mitigate future confusion regarding justifications for 8(a) sole-source contracts over $20 million, the Administrator of the Office of Federal Procurement Policy, in consultation with the FAR Council, should promulgate guidance to clarify whether an 8(a) justification is required for 8(a) contracts that are subject to a pre-existing Competition in Contracting Act (CICA) class justification. |
The FAR Council opened a FAR case (2013-018) to address the recommendations from this report by clarifying the requirement for sole source 8(a) justifications. In April 2018, the FAR council closed this FAR case with no changes to regulation. In July 2018, officials from the Office of Federal Procurement Policy explained that the FAR Council did not make any changes because public comments on the rule were strongly opposed to the changes, and the proposed changes affected a very small number of contracts, among other reasons. As a result, we are closing this recommendation as not implemented.
|
| Office of Federal Procurement Policy | To help mitigate future confusion regarding justifications for 8(a) sole-source contracts over $20 million, the Administrator of the Office of Federal Procurement Policy, in consultation with the FAR Council, should promulgate guidance to provide additional information on actions contracting officers should take to comply with the justification requirement when the contract value rises above or falls below $20 million between SBA's acceptance of the contract for negotiation under the 8(a) program and the contract award. |
The FAR Council opened a FAR case (2013-018) to address the recommendations from this report by clarifying the requirement for sole source 8(a) justifications. In April 2018, the FAR council closed this case with no changes to regulation. In July 2018, officials from the Office of Federal Procurement Policy explained that the FAR Council did not make any changes because public comments on the rule were strongly opposed to the changes, and the proposed changes affected a very small number of contracts, among other reasons. As a result, we are closing this recommendation as not implemented.
|
| Office of Federal Procurement Policy | To help mitigate future confusion regarding justifications for 8(a) sole-source contracts over $20 million, the Administrator of the Office of Federal Procurement Policy, in consultation with the FAR Council, should promulgate guidance to clarify whether and under what circumstances a separate sole-source justification is necessary for out-of-scope modifications to 8(a) sole-source contracts. |
The FAR Council opened a FAR case (2013-018) to address the recommendations from this report by clarifying the requirement for sole source 8(a) justifications. In April 2018, the FAR council closed this FAR case with no changes to regulation. In July 2018, officials from the Office of Federal Procurement Policy explained that the FAR Council did not make any changes because public comments on the rule were strongly opposed to the changes, and the proposed changes affected a very small number of contracts, among other reasons. As a result, we are closing this recommendation as not implemented.
|
| Small Business Administration | To help ensure that Small Business Administration officials meet FAR requirements for sole source contracts over $20 million, the Administrator of the Small Business Administration should, when revising operating procedures and training curricula, include instructions to business opportunity specialists on the steps they are to take to confirm whether agencies have met the justification requirement, such as obtaining a copy of the justification from the agency. |
In June 2015, Small Business Administration (SBA) officials provided updated training materials used to train SBA's Business Opportunity Specialists. The training includes information on procedures SBA officials should take related to the justification process, and explains that the procuring agencies must certify to SBA that it has completed the justification and approval requirement, among other things. In March of 2016, SBA issued a procedural notice that noted that an agency must provide a copy of the 8(a) justification along with the offer letter to show SBA that it has executed the justification in accordance with provisions of FAR 6.303. As a result of the training and procedural notice, we closed this recommendation as implemented.
|
| Small Business Administration | To help ensure that Small Business Administration officials meet FAR requirements for sole source contracts over $20 million, the Administrator of the Small Business Administration should, when revising operating procedures and training curricula, include instructions to confirm that procuring agencies have prepared an 8(a) justification rather than a CICA justification. |
In June 2015, Small Business Administration (SBA) officials provided updated training materials used to train SBA's Business Opportunity Specialists and the revised partnership agreement between SBA and the procuring agencies that is used to train procuring agencies. The partnership agreement and the training materials clearly lay out the required contents of the 8(a) justification. In addition, in March 2016, SBA issued a procedural notice to 8(a) business development staff stating that, among other things, an agency must provide a copy of the justification and approval along with the offer letter to SBA showing that it has executed the justification in accordance with the FAR, which contain the required contents of the 8(a) justification. As a result of the training, revised partnership agreement and procedural notice, we closed this recommendation as implemented.
|
| General Services Administration | To help ensure that federal procurement data provides accurate and complete information, the Administrator of the General Services Administration should implement controls in FPDS-NG to preclude agency officials from entering a value of zero dollars for the Base and All Options data element when the initial award of a contract is entered into the database. |
February 2013, GSA implemented a change to the Federal Procurement Data System-Next Generation, and the system will no longer accept a value of zero dollars for an initial contract award.
|