Federal Contracting: Noncompetitive Contracts Based on Urgency Need Additional Oversight
Highlights
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.
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.
Recommendations
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.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In December 2014, DOD updated its policy, guidance and instructions for federal procurement competition data entry. This update reiterates that non-competitive contracts awarded using simplified acquisition procedures on an urgent basis should be coded as using simplified procedures instead of selecting non-competitive on the basis of unusual and compelling urgency.
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| Department of State | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In May 2014, the Procurement Executive issued guidance clarifying the correct procedures for accurately reporting data when awarding non-competitive contracts using simplified acquisition procedures. Specifically, the guidance instructs State officials on the correct data entry selections in the extent competed, solicitation procedures, and other than full and open competition fields in the Federal Procurement Data System-Next Generation.
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| U.S. Agency for International Development | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In September 2016, USAID issued an announcement in a newsletter to agency acquisition personnel that reiterated the correct procedures for accurately reporting data when awarding non-competitive contracts using simplified acquisition procedures on an urgent basis. Specifically, the newsletter reminded staff that Non-competitive contracts awarded on an urgent basis using simplified acquisition procedures should be coded in Federal Procurement Data System-Next Generation as using simplified procedures instead of selecting non-competitive on the basis of unusual and compelling urgency.
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| Department of Defense | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should establish a process for documenting that justifications were posted in compliance with the requirements in the FAR. |
In April 2015, the Acting Director of Defense Procurement and Acquisition Policy issued a memorandum encouraging contracting officers to retain documentation in the contract file showing that justification and approval documents were made publicly available. This memorandum was incorporated into the Defense Federal Acquisition Regulations by reference. As a result, we are closing this recommendation as implemented.
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| Department of State | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should establish a process for documenting that justifications were posted in compliance with the requirements in the FAR. |
In May 2014, the Procurement Executive issued guidance clarifying the actions necessary to document that justifications were made publicly available. Specifically, the guidance requires contracting officers to retain a copy of the FedBizOpps posting of the justification in the contract file to document compliance with the FAR requirement to publicly post justifications within 30 days of the award of a non-competitive contract on the basis of urgency.
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| U.S. Agency for International Development | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should establish a process for documenting that justifications were posted in compliance with the requirements in the FAR. |
In September 2016, USAID modified its database which tracks justifications for noncompetitive contracts to include verifying that justifications for unusual and compelling urgency were posted in compliance with the requirements in the FAR. This tracker is completed by the Agency Competition Advocate when conducting their required review of all justifications for noncompetitive contracts.
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| Department of Defense | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In April 2015, the Acting Director of Defense Procurement and Acquisition Policy issued a memorandum instructing contracting officers to notify management when approval signatures are not obtained in time to make justification and approval documents publically available within the timeframe required by the FAR. This memorandum was incorporated into the Defense Federal Acquisition Regulations by reference. As a result, we are closing this recommendation as implemented.
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| Department of State | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In May 2014, the Procurement Executive issued guidance requiring that all justifications for the use of the unusual and compelling exception be publicly posted within 30 days of contract award, regardless of whether all approving signatures have been obtained. Furthermore, the guidance reminds contract officers to include sufficient planning time to obtain required approval signatures and to track the justification to ensure that all signatures are obtained.
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| U.S. Agency for International Development | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In providing comments on this report, USAID concurred with the recommendation and stated that it planned to assess existing guidance, making updates where necessary to address the recommendation. In December 2015, USAID informed us that it had conducted an assessment of contracts awarded on the basis of an unusual and compelling urgency and its current guidance and policy as it relates to specific to actions to take when required signatures are not obtained in order to post the justifications within 30 days. They found no instances of justifications for contracts awarded on the basis of an unusual and compelling urgency without signatures. Accordingly, USAID concluded that they did not need to update their guidance as there is no need as evidenced by their assessment. As a result, we are closing this recommendation as implemented.
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| Department of Defense | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In commenting on our report, DOD concurred with our recommendation. In April 2015, the Acting Director of Defense Procurement and Acquisition Policy issued a memorandum instructing contracting officers to notify management when the cumulative dollar value of a contract awarded on the basis of urgency increases beyond the initial value at award and instructs components to ensure that the appropriate approval level is obtained. This memorandum was then incorporated into the Defense Federal Acquisition Regulations by reference.
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| Department of State | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In May 2014, the Procurement Executive issued guidance requiring that contracting officials consider the impact of contract modifications on the cumulative dollar value of contracts awarded non-competitively on the basis of unusual and compelling urgency. Specifically, contracting officials should seek a higher level of approval when modifications raise the cumulative dollar value of a contract awarded on the basis of urgency above the next higher approval threshold.
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| U.S. Agency for International Development | To help improve reporting of federal procurement data and strengthen oversight of contracts awarded on the basis of an unusual and compelling urgency, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should 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. |
In July 2014, USAID updated its guidance requiring that the Agency Competition Advocate (ACA) be consulted for modifications to existing contracts that increase the total estimated amount of the award. To implement this review by the ACA, USAID updated its noncompetitive justification tracking tool in September 2016 to track the cumulative value of contracts awarded on the basis of unusual and compelling urgency. This tool is populated by the ACA, and supporting staff, during the required consultation with the ACA for increases in the total estimated value of existing contracts.
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| Office of Management and Budget | 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, the Director of the Office of Management and Budget, through the Office of Federal Procurement Policy, should 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. |
In July 2015,OMB issued a final rule modifying the FAR to clarify the process for extending contracts awarded using the urgency exception beyond 1 year. The revisions instruct federal agencies to consider all option periods when obtaining a determination of exceptional circumstances and instructs contracting officers to obtain a determination of exceptional circumstances for subsequent modifications that will extend the cumulative period of performance beyond 1 year.
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