Multiyear Contracting

A multiyear contract is a commitment by the Government to purchase services or supplies from a contractor for a period extending beyond the fiscal year in which the contract is made. In its study on multiyear contracting, the Commission on Government Procurement concluded that multiyear procurement was a beneficial tool for both the Government and the contractor. The Commission recommended that Congress enact legislation to authorize all executive agencies to enter into multiyear contracts for supplies and services using annual appropriations. GAO has regarded multiyear contracting as a viable acquisition method that should be pursued and used where feasible and applicable. GAO believes that, in any multiyear contract situation: (1) there should be a continuing requirement for the supplies or services consonant with current plans for the proposed contract period; (2) the furnishing of the supplies or services should require a substantial initial investment; and (3) the contract should promote the best interests of the United States by encouraging effective competition and by promoting economies in operation. Since the Department of Defense's annual procurement budget is the largest of any Government agency, it could benefit greatly from the use of multiyear contracts. The desire of Congress to maintain close control over agency budgets through annual reviews and appropriations has led to some resistance in authorizing multiyear contracting. Congress may want agencies to justify their use of multiyear contracting during its annual budgetary reviews, which could provide it some desirable visibility and control over these efforts.