DOD wary of procurement provision

"Multiple Award Contracts for Services"

A provision in the Senate's version of the Defense authorization bill would hogtie the Defense Department's ability to use governmentwide, multiple-award contracts — including the General Services Administration's schedule contracts, DOD's top procurement official warned.

The provision — Section 803 of the Senate's version of the Defense authorization bill, S. 1416 — would require DOD contracting officers to compete all task orders greater than $50,000 among all eligible schedule contractors. Furthermore, contracting officers would have to fully and fairly evaluate every offer they received.

If the provision becomes law, a contracting officer who wants to use the GSA schedule contracts would have to seek bids from all of the eligible schedule contract vendors.

Deidre Lee, director of Defense procurement, said that if the provision makes it through a House/Senate conference committee, "it will make it more difficult to use" governmentwide acquisition contracts.

Larry Allen, executive director of the Coalition for Government Procurement, a Washington, D.C., industry group, said the section would require that task orders go out to hundreds of companies, "virtually grinding to a halt" DOD's ability to use the GSA schedule contracts.

The provision seeks to address longstanding concerns about agencies sole-sourcing contracts. Lawmakers, led by Sen. Carl Levin (D-Mich.), chairman of the Senate Armed Services Committee, have been concerned that agencies are not opening task orders on multiple-award contracts to competition.

Despite continued warnings that these problems could result in limitations being put on the procurement reforms enacted in recent years, the DOD inspector general audit issued last month found that many buys for services are still going uncontested.

The report, "Multiple Award Contracts for Services," found that 66 of 124 task orders in fiscal 2001 were issued on a sole-source basis without providing contractors a fair opportunity to be considered.

In the two-year review period — fiscal 2000 and 2001 — the DOD IG found that 304 of 423 task orders, or 72 percent, were awarded on a sole-source or directed-source basis. Of those, 264 were improperly supported. Only 119 of 423 task orders were competed, and of those 119, only 82 — or 69 percent — received multiple bids.

"Contracting organizations continued to direct awards to selected sources without providing all multiple-award contractors a fair opportunity to be considered," the DOD IG audit report says. "As a result, DOD was not obtaining the benefits of sustained competition and the reduced costs envisioned when Congress provided the authority for multiple-award contracts."

Regardless of whether the provision becomes law, DOD is "going to be more judicious in how it uses" these contract vehicles, and there will be a "substantial push" to ensure that these contracts are used correctly, Lee said during a presentation Oct. 18 at the Government Contracting Institute's Federal Contracting 2002 conference in Washington, D.C.

Allen noted that this is not the "appropriate time to be hamstringing DOD contracting officers." Furthermore, he argued that the fix seeks to address a problem that does not really exist. And if there is a problem, it is with services, not products, yet products have been included in the provision, he said.